Memorex Telex NV – ‘DEF 14A’ for 9/30/96

As of:  Tuesday, 9/17/96   ·   For:  9/30/96   ·   Accession #:  912057-96-20523   ·   File #:  0-19862

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Definitive Proxy Solicitation Material   —   Schedule 14A
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Document/Exhibit                   Description                      Pages   Size 

 1: DEF 14A     Definitive Proxy Solicitation Material                76    342K 

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SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No.    ) 

Filed by the Registrant /X/                                             
Filed by a Party other than the Registrant / /                          

Check the appropriate box:                                              
/ /  Preliminary Proxy Statement                                        
/ /  Confidential, for Use of the Commission Only (as permitted by Rule 
14a-6(e)(2))                                                  
/X/  Definitive Proxy Statement                                         
/ /  Definitive Additional Materials                                    
/ /  Soliciting Material Pursuant to Section 240.14a-11(c) or Section   
240.14a-12                                                    

                   MEMOREX TELEX N.V
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):                              

/X/  $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or    
Item 22(a)(2) of Schedule 14A.                                        
/ /  $500 per each party to the controversy pursuant to Exchange Act Rule       
14a-6(i)(3).                                                          
/ /  Fee computed on table below per Exchange Act Rules 14a-6(i)(4)             
and 0-11.                                                             
1) Title of each class of securities to which transaction applies:    
        ------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:       
        ------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed   
     pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):      
        ------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:                   
        ------------------------------------------------------------------------
5) Total fee paid:                                                    
        ------------------------------------------------------------------------
/ /  Fee paid previously with preliminary materials.                            
/ /  Check box if any part of the fee is offset as provided by Exchange Act Rule
  0-11(a)(2) and identify the filing for which the offsetting fee was paid
    previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.                   
1) Amount Previously Paid:                                            
        ------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:                      
        ------------------------------------------------------------------------
3) Filing Party:                                                      
        ------------------------------------------------------------------------
4) Date Filed:                                                        
        ------------------------------------------------------------------------

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MEMOREX TELEX N.V.
HOOGOORDDREEF 9, 1101 BA
AMSTERDAM, THE NETHERLANDS

------------------------

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

--------------------- 

To Our Stockholders:                                                            

   NOTICE IS HEREBY GIVEN that the Annual General Meeting of Stockholders (the
"Meeting") of Memorex Telex N.V., a naamloze vennootschap organized under the   
laws of the Netherlands (the "Company"), will be held at the offices of the     
Company at Hoogoorddreef 9, 1101 BA Amsterdam, The Netherlands, on September 30,
1996, at 11:00 a.m. (local time). At the Meeting, the Company's stockholders    
will be asked to:                                                               

                                                                [Download Table]
                                                                            
Proposal 1:     elect each of Peter H. Dailey, Gregory S. Wood, Brad Sowers 
                and Anthony J. Barbieri to the Management Board of the      
                Company;                                                    

Proposal 2:     adopt the annual financial statements contained in the      
                Statutory Annual Report of the Company for the fiscal year  
                ended March 31, 1996, which also contains the Report of the 
                Management Board of the Company; and                        

Proposal 3:     appoint Ernst and Young LLP as United States auditors for   
                the Company and Moret, Ernst & Young as Netherlands auditors
                for the Company for the fiscal year ending March 31, 1997;  
                and                                                         

consider such other business as may properly come before the Meeting or any     
adjournment thereof.                                                            

                               BY ORDER OF THE SUPERVISORY
                               BOARD OF MEMOREX TELEX N.V.

Amsterdam, The Netherlands                                                      

September 6, 1996                                                               

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MEMOREX TELEX N.V.
HOOGOORDDREEF 9 1101BA
AMSTERDAM, THE NETHERLANDS

------------------------

PROXY STATEMENT 

--------------------- 

ANNUAL GENERAL MEETING OF STOCKHOLDERS TO BE HELD ON SEPTEMBER 30, 1996 

This Proxy Statement is being mailed to you in connection with the      
solicitation of proxies by the Supervisory Board of Memorex Telex N.V., a       
naamloze vennootschap organized under the laws of the Netherlands (the          
"Company"), for use at the Annual General Meeting of Stockholders (the          
"Meeting") of the Company to be held on September 30, 1996, at 11:00 a.m. (local
time), at the offices of the Company at Hoogoorddreef 9, 1101 BA Amsterdam, The 
Netherlands. The approximate date on which this Proxy Statement and the         
accompanying Notice of Annual General Meeting and Proxy are being mailed is     
September 6, 1996.                                                              

VOTING SECURITIES 

  The Company has 25,076,665 shares of common stock, dfl. 0.10 nominal value
(the "Common Stock"), outstanding as of August 30, 1996. The Company has        
established a program of American Depositary Receipts (the "ADRs") for the      
benefit of the Common Stock, and all shares of Common Stock were issued in the  
form of ADRs. Each ADR evidences one American Depositary Share which, in turn,  
represents one share of Common Stock. At the close of business on August 30,    
1996, there were 128 registered holders of the ADRs.                            

    Under the Deposit Agreement among the Company, Morgan Guaranty Trust Company
of New York (the "Depositary"), and the holders of ADRs, these holders are      
entitled to instruct the Depositary as to the exercise of voting rights         
pertaining to the Common Stock represented by ADRs. Record holders of ADRs at   
the close of business on August 30, 1996, are entitled to instruct the          
Depositary as to the exercise of voting rights at the Meeting and any           
adjournments thereof.                                                           

   There is no quorum requirement for conducting business at the Meeting. Each
share of Common Stock has the right to cast ten votes on all matters on which   
stockholders of the Company are entitled to vote. Stockholders may not split    
their votes. The affirmative vote of the holders of at least a majority of all  
votes cast at the Meeting is necessary for (i) the election of each of Peter H. 
Dailey, Gregory S. Wood, Brad Sowers and Anthony J. Barbieri to the Management  
Board of the Company, (ii) the adoption of the annual financial statements      
contained in the Statutory Annual Report of the Company (the "Statutory Annual  
Report") for the fiscal year ended March 31, 1996, which also contains the      
Report of the Management Board of the Company (the "Management Report"), and    
(iii) the appointment of Ernst & Young LLP as United States auditors and Moret, 
Ernst & Young as Netherlands auditors for the Company for the fiscal year ending
March 31, 1997 (items (i), (ii) and (iii) are referred to as the "Agenda        
Items").                                                                        

SOLICITATION AND REVOCATION OF PROXIES

   The Depositary has agreed it will endeavor, insofar as practicable, to vote
the Common Stock deposited with it only in accordance with the instructions of  
the holders of ADRs as given by means of the instruction card delivered with    
this Proxy Statement. Shares of Common Stock for which the Depositary has not   
received an instruction card will not be voted at the Meeting. Properly signed  
and dated instruction cards should be returned to the Depositary at the address 
set forth below no later than 4:00 p.m., Eastern Standard Time, on September 26,
1996 (the "Voting Deadline"). A prepaid, addressed return envelope is enclosed. 

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       Morgan Guaranty Trust Company
of New York       
P.O. Box 9184         
          Boston, Massachusetts 02102-9906

   For overnight courier or other express deliveries, please use the following
address:                                                                        

J.P. Morgan           
40 Boston Equiserve   
150 Royalle Street    
Canton, MA 02021      

Attn: John Sjosten    

   A holder of ADRs delivering an instruction card has the power to revoke the
instruction card by delivering to the Depositary before the Voting Deadline a   
written notice of revocation or a properly signed instruction card bearing a    
later date than the instruction card being revoked. If the instruction card is  
properly signed but no voting instruction is given, the Depositary, through its 
nominee or nominees, will vote the underlying shares of Common Stock FOR        
approval of the Agenda Items.                                                   

    The Company does not know of any matters other than as set forth herein that
are expected to be presented for consideration at the Meeting. If other matters 
properly come before the Meeting, the Depositary, through its nominee or        
nominees, intends to vote thereon in accordance with its judgment.              

 The costs of soliciting proxies for the Meeting are borne by the Company.

MANAGEMENT

GENERAL                                                                         

The Company was formed in 1986 under Netherlands law and, since its     
formation, has had a voluntary two-tier management system consisting of a       
Management Board and a Supervisory Board. The Management Board is responsible   
for the management and operation of the Company and for its dealings with third 
parties. Each member of the Management Board has the power to represent and     
legally bind the Company. The Supervisory Board assists the Management Board by 
rendering advice and supervises the policy of the Management Board and the      
general business of the Company. Members of the Supervisory Board do not have   
the power to represent or legally bind the Company. The members of both the     
Management Board and the Supervisory Board are appointed by the stockholders of 
the Company. Under the laws of the Netherlands, the Company is not required to  
have a Supervisory Board. The Company maintains the Supervisory Board, which may
consist only of individuals who are not members of the Management Board, to     
assure adequate supervision of the policy of the Management Board and the       
general business of the Company.                                                

NOMINEES FOR MANAGEMENT BOARD                                                   

    The following information is furnished with respect to each person nominated
by the Supervisory Board for election to the Management Board. All nominees are 
citizens of the United States.                                                  

  HON. PETER H. DAILEY, 66, served as Chairman of the Supervisory Board from
1992 until his resignation as of March 31, 1996, to become the Company's Chief  
Executive Officer. He has also been the Chairman of Enniskerry Financial Ltd.   
since 1985. He was previously United States Ambassador to Ireland and Special   
Envoy to NATO, and thereafter was a member of the President's Advisory          
Commission on Arms Control and Disarmament. He also served as Vice Chairman of  
the Interpublic Group of Companies and the Dailey Group. Mr. Dailey is currently
a director of Chicago Title and Trust Company, Sizzler International, Inc.,     
Pinkerton's, Inc., and Jacobs Engineering Group Inc.                            

  GREGORY S. WOOD, 38, serves as Senior Vice President Finance and Treasurer
of the Company. Mr. Wood joined the company in 1989 and has served in a variety 
of financial positions before becoming                                          

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Senior Vice President, Finance and Treasurer of the Company in April 1996. Prior
to his employment with the Company, Mr. Wood worked for Ernst & Young as a      
consultant.                                                                     

BRAD SOWERS, 34, serves as Senior Vice President of Operations of the   
Company. Mr. Sowers joined the Company in 1986 as an account manager, and has   
served as a district and area business manager, regional business director, and 
as Vice President of World Wide Marketing. Prior to joining the Company, Mr.    
Sowers was with Harris Lanier 3M in a sales position.                           

  ANTHONY J. BARBIERI, 48, serves as Senior Vice President and Group Counsel
of the Company and Senior Vice President, General Counsel and Secretary of      
Memorex Telex Corporation. Mr. Barbieri has been with the company for 8 years.  
Previously, Mr. Barbieri held legal positions with Syntex Corporation and G.D.  
Searle & Co., and in private practice.                                          

THE SUPERVISORY BOARD RECOMMENDS A VOTE FOR THE ELECTION OF EACH OF THE 
FOREGOING PERSONS TO THE MANAGEMENT BOARD.                                      

INCUMBENT MEMBERS OF THE MANAGEMENT BOARD                                       

    The following information is furnished with respect to each incumbent member
of the Management Board. All executive authority to make policy decisions       
emanates from the Management Board.                                             

DAVID J. FAULKNER, 56, is a Managing Director and the Chief Financial   
Officer of the Company. He is also the Chief Financial Officer of Memorex Telex 
Corporation and the Vice Chairman of its Board of Directors. Mr. Faulkner has   
served as Chief Financial Officer of the Company since October 1989. Prior to   
his employment with the Company, Mr. Faulkner was a Senior Partner with Arthur  
Young & Co. from 1986 until 1989. Mr. Faulkner is a citizen of the United       
States.                                                                         

ABN Trustcompany (Nederland) B.V. ("ABN") also serves as a member of the
Management Board. Under a management agreement, ABN performs certain            
administrative functions for the Company. The management agreement provides for 
the payment by the Company of an annual management fee of dfl. 10,000, an annual
administration fee of dfl. 2,000, and the out-of-pocket expenses incurred by ABN
in the performance of its duties. The management agreement may be terminated by 
either party upon thirty day's notice given prior to each anniversary date. In  
addition, ABN may resign as a member of the Management Board at any time by     
giving two months notice to the other members of the Management Board.          

SUPERVISORY BOARD 

MEMBERS OF THE SUPERVISORY BOARD                                                

    The following information is furnished with respect to each incumbent member
of the Supervisory Board. All members are citizens of the United States and have
served on the Supervisory Board since June 1994 except Catherine Y. Selleck who 
was elected to the Supervisory Board on September 30, 1994.                     

    HAROLD FIRST, 59, has been an independent financial consultant since January
1993. From December 1990 through December 1992, Mr. First was the Chief         
Financial Officer of Icahn Holding Corp. Mr. First is currently a director of   
Taj Mahal Realty Corporation, Tel-Save Holdings, Inc. and Cadus Pharmaceutical  
Corporations. Mr. First also previously served as a director of ACF Industries, 
Inc., American Property Investors, Inc., Trans World Airlines, Inc., and Taj    
Majal Holding Corporation.                                                      

   MICHAEL S. GROSS, 34, is one of the founding principles of Apollo Advisors,
L.P., which, together with certain affiliates, acts as managing general partner 
of Apollo Investment Fund, L.P., AIF II, L.P., and the recently formed Apollo   
Investment Fund III, L.P. (collectively, the "Apollo Funds"), Private securities
investment funds, and of Lion Advisors, L.P. which acts as financial advisor to 
and representative for certain institutional investors with respect to          
securities investments. Prior to 1990, Mr. Gross was an investment banker with  
Drexel Burnham Lambert Incorporated. Mr. Gross is currently a director of       
Converse, Inc., The Florsheim Shoe Company, Furniture Brands International,     
Inc., and Profitts, Inc.                                                        

    JOSHUA J. HARRIS, 31, has been a limited partner of Apollo Advisors and Lion
Advisors, having been associated with them since 1990. Apollo Advisors, together
with certain affiliates, acts as managing general                               

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partner of the Apollo Funds. Lion Advisors acts as financial advisor to and     
representative for certain institutional investors with respect to securities   
investments. Mr. Harris is currently a director of Converse, Inc., The Florsheim
Shoe Company and Furniture Brands International, Inc.                           

WALTER J. HUMANN, 58, has been with Hunt Consolidated, Inc., since 1975.
During that period he has held various executive positions, including Director, 
Chief Operating Officer, and Chairman of the Executive Committee. Earlier, he   
was Vice President for commercial operations, LTV Corporation. He has degrees   
from M.I.T., Harvard Business School and SMU Law School. Mr. Humann is currently
a director of the RAND Corporation. Mr. Humann previously also served as a      
director of various manufacturing, service, and financial organizations.        

    JAMES E. OUSLEY, 50, has been employed by the Control Data Corporation since
1968 in a number of positions, including Chief Executive Officer and President  
of Control Data Systems, Inc., from 1992 to the present, President, Computer    
Products Group from 1989 to 1991, Vice President--Marketing and Sales, Computer 
Products Group in 1989, Vice President--World Wide Sales and Services, Imprimus 
Technology Incorporated from 1988 to 1989, and Vice President--Sales and        
Strategies Alliance, Data Storage Products Group from 1987 to 1988. Mr. Ousley  
is currently a director of Control Data Systems, Inc., and Metaphase Technology,
Inc.                                                                            

    CATHERINE Y. SELLECK, 62, has been an independent consultant to the computer
industry since January 1994. From January 1992 through January 1994, Ms. Selleck
was the President and Chief Executive Officer of Metaphor, Inc. Ms. Selleck is  
currently a director of Right Management Consultants, Inc. Previously, Ms.      
Selleck held several executive positions with IBM Corporation, including        
Corporate Director of Office and Decision Support Systems from 1989 to 1991,    
Vice President, Field Operations, National Distribution Divisions from 1986 to  
1988, and Vice President, Information Systems and Administration, National      
Distribution Division from 1984 to 1985.                                        

MEETINGS                                                                        

    During the fiscal year ended March 31, 1996 ("fiscal 1996"), the Supervisory
Board held 29 meetings. Nine meetings were in-person meetings with the          
management of the Company, and each member of the Supervisory Board attended at 
least 75% of all meetings held during fiscal 1996. The other meetings were by   
telephonic conference call.                                                     

COMMITTEES                                                                      

The Supervisory Board has established the following committees.         

   COMPENSATION COMMITTEE.  The Compensation and Stock Option Committee of the
Supervisory Board (the "Compensation Committee") met 2 times during fiscal 1996.
On April 19, 1996, Messrs. Humann and Gross and Ms. Selleck were appointed as   
the current members of the Compensation Committee. The Compensation Committee   
provides advice to and assists the Supervisory Board in reviewing and           
establishing compensation for the members of the Management Board, including the
determination of bonuses pursuant to the Company's management bonus plan.       

  AUDIT COMMITTEE.  The Audit Committee of the Supervisory Board (the "Audit
Committee") met 2 times during fiscal 1996. On April 19, 1996, Messrs. First,   
Harris and Ousley were appointed as the current members of the Audit Committee. 
The Audit Committee provides advice to and assists the Supervisory Board in     
reviewing the Company's audit function.                                         

SUPERVISORY BOARD COMPENSATION                                                  

    Each member of the Supervisory Board is entitled to receive a $25,000 annual
fee and $1,000 per diem (including travel time) plus reimbursement for all      
out-of-pocket expenses incurred in connection with attendance at meetings of the
Supervisory Board and committees of the Supervisory Board. The amount of these  
fees was set by the stockholders of the Company.                                

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EXECUTIVE COMPENSATION

REPORT OF THE COMPENSATION AND STOCK OPTION COMMITTEE                           

 This report was prepared by the Compensation Committee of the Supervisory
Board.                                                                          

 In determining the amount and composition of management compensation, the
Compensation Committee and the Supervisory Board are guided by the following    
fundamental objectives: (1) attracting and retaining outstanding members of the 
Company's Management Board; (2) encouraging members of the Management Board to  
acquire and hold Common Stock; and (3) ensuring that a portion of management    
compensation is variable, tied to quantifiable short-term and long-term measures
of the Company's performance                                                    

During the course of the fiscal year, the Supervisory Board approved    
revisions to the Company's employment arrangements with the then-incumbent      
members of the Management Board, Messrs. Gumucio, Faulkner, and Morin. In       
addition, the Company continued to provide annual incentive bonuses for each    
member of the Management Board pursuant to the Company's management bonus plan  
based upon percentage achievement of certain performance goals, and the Company 
maintained the respective pension plans in which each member of the Management  
Board is a participant. In March 1996, Messrs. Gumucio and Morin resigned from  
the Management Board of the Company. As of March 31, 1996, the Hon. Peter H.    
Dailey resigned from the Supervisory Board to become the Company's Chief        
Executive Officer effective April 1, 1996. The Supervisory Board approved an    
employment arrangement with Mr. Dailey which provides for salary and bonus      
competitive with industry standards.                                            

The Company's compensation and benefit programs and management incentive
compensation plan have been designed to attract, motivate, and retain senior    
management by providing a competitive total compensation opportunity based on   
performance. Competitive base salaries that reflect the individual's level of   
responsibility and annual variable performance-based incentive awards for       
certain key employees are important elements of the Company's compensation      
philosophy.                                                                     

                           Respectfully submitted,

                     Catherine Selleck

                 Walter Humann

                 Michael Gross

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EXECUTIVE COMPENSATION TABLE                                                    

   The following table provides information about the compensation for Messrs.
Gumucio, Faulkner and Morin (the "Named Executive Officers").                   

SUMMARY COMPENSATION TABLE

                                                        [Enlarge/Download Table]

                                                                              LONG TERM               
                                                                             COMPENSATION             
                                        ANNUAL COMPENSATION (2)                AWARDS                 
                             ----------------------------------------------  -----------              
                                                                   OTHER     SECURITIES       ALL     
                                                                  ANNUAL     UNDERLYING      OTHER    
                               FISCAL                           COMPENSATION  OPTIONS/    COMPENSATION
NAME AND PRINCIPAL POSITION     YEAR       SALARY      BONUS        (3)         SARS          (5)     
---------------------------  -----------  ---------  ---------  -----------  -----------  ----------- 
                                                                                                      
Marcelo A. Gumucio.........        1996   $ 800,000  $ 412,500   $ 186,307           0     $   1,585  
  Chairman, President, and         1995   $ 800,000  $ 420,000   $ 441,800   $875,000(4)   $   1,480  
  Chief Executive                  1994   $ 900,000  $1,000,000                                  600  
  Officer(1)                                                                                          

David J. Faulkner..........        1996   $ 400,000  $ 226,125   $  16,125           0     $   9,500  
  Vice Chairman and Chief          1995   $ 400,000  $ 120,000   $  370,00   $150,000(4)   $   2,225  
  Financial Officer                1994   $ 500,000  $ 500,000                             $     600  

Rudolph G. Morin...........        1996   $ 305,760  $ 155,387           0           0     $  11,307  
  Senior Vice President(6)         1995   $ 315,000  $  75,000   $ 292,633   $ 50,000(4)   $   1,745  

------------------------                                                        

(1) Mr. Gumucio resigned from the Company in March 1996                         

(2) Compensation information is provided for the fiscal year ended March 31,    
1996, 1995, and 1994.                                                   

(3) The amounts listed, for 1995, include discretionary relocation allowances   
$387,000 for Mr. Gumucio, $370,000 for Mr. Faulkner and $292,633 for Mr.
Morin. The amounts listed for 1996 include discretionary relocating     
allowances of $132,461 for Mr. Gumucio and $16,125 for Mr. Faulkner.    
Mr.Gumucio also received $53,846 in vacation allowance.                 

(4) The numbers listed are for employee stock options granted during fiscal     
1995. As of March 31, 1995, no options have been exercised.             

(5) The amounts listed are contributions paid by the Company to their 401(k)    
plan for the benefit of each of Messrs. Gumucio, Faulkner, and Morin.   

(6) Mr. Morin resigned from the Company in March 1996.                          

EMPLOYMENT CONTRACTS                                                            

  The Company has entered into employment agreements with Messrs. Dailey and
Faulkner. The following is a summary of the principal terms of these agreements.

    The term of Mr. Dailey's employment agreement as the Chief Executive Officer
of the Company commenced on April 1, 1996 and will continue until March 31,     
1997. This initial term will be automatically renewed for successive one-year   
periods unless either party provides the other with three (3) months notice of  
termination. Mr. Dailey is entitled to an annual base salary of $500,000 and an 
annual incentive bonus of up to 150% of his base salary, based upon performance 
goals. The employment agreement provides for a grant of options to purchase     
250,000 shares of the Company's common stock in accordance with the terms of the
Company's Amended and Restated Stock Option Plan for Management. The employment 
agreement also provides for the participation in all employee incentive and     
benefit programs of the Company including the Company's pension plan, and       
certain perquisites. Upon any termination of Mr. Dailey's                       

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employment by the Company without cause, he will be entitled to continued       
payments of his then-current annual base salary for the current term of         
employment.                                                                     

The current employment agreement for Mr. Faulkner provides for his      
employment as Vice Chairman, Chief Financial Officer, and Managing Director of  
the Company. Mr. Faulkner receives an annual base salary of $400,000 and        
participates in the Company's management bonus plan, stock option plan, and U.S.
employee benefits program. The employment agreement provides for a guaranteed   
bonus of $120,000 for the fiscal year ending March 31, 1996. Mr. Faulkner's     
employment may be terminated by either party upon 60-day notice. Upon any       
termination of Mr. Faulkner's employment by the Company without cause, he will  
be entitled to a severance payment equal to his then current annual base salary.
The employment agreement further provides for a two year severance payment if he
is terminated without cause within twelve months of a change in control or a    
fundamental securities transaction. Upon any termination by the Company without 
cause, Mr. Faulkner is entitled to certain healthcare benefits, outplacement    
assistance of up to $25,000, and relocation assistance. "Change in control" is  
defined to include (i) any person or group, other than current shareholders or  
debtholders, becoming the beneficial owner of at least 35% of the Company's     
voting stock, if Mr. Faulkner is terminated within 60 days thereafter, or 50% of
the Company's voting stock, (ii) any adoption of a liquidation plan by the      
Company, and (iii) any disposition of the business of the Company by sale,      
merger, consolidation, or other transaction. Fundamental Securities Transaction 
is defined to mean the purchase or agreement to purchase by any person or group 
any securities, whether convertible to common stock or not, which carries with  
it the right of the purchasing person or group to purchase 35% or more of the   
Company's voting capital securities at any time.                                

PENSION PLANS                                                                   

   The Company does not maintain a unified pension plan for its employees, but
rather maintains separate pension plans in most of the countries in which the   
Company or its subsidiaries operate.                                            

The pension plan for the United States is the Memorex Telex Employees'  
Pension Plan (the "Pension Plan"). The following table shows the estimated      
annual benefits payable upon retirement, assuming the final average compensation
and years of service indicated.                                                 

PENSION PLAN TABLE

                                                        [Enlarge/Download Table]

                                                                   YEARS OF SERVICE                   
                                                 -----------------------------------------------------
REMUNERATION                                        15         20         25         30         35    
-----------------------------------------------  ---------  ---------  ---------  ---------  ---------
                                                                                                      
$125,000.......................................  $  26,302  $  35,869  $  43,836  $  52,603  $  61,370
$150,000 and above.............................  $  31,927  $  42,569  $  53,211  $  63,853  $  74,495

   Benefits are calculated based on the following formula: 1% of Final Average
Compensation times Years of Service (maximum 35 years), plus 0.5% of Final      
Average Compensation in excess of Social Security Covered Compensation times    
Years of Service (maximum 35 years). The foregoing table takes into account the 
earnings limit of $150,000 for qualified defined benefit pension plans imposed  
by Section 401(a)(17) of the Internal Revenue Code of 1986, as amended, which   
provision became effective on January 1, 1994. Benefits shown in the table are  
not subject to reduction for social security benefits or other offsetting       
amounts. Benefits under the Pension Plan vest after five years of service.      
Covered compensation includes salaries and bonus awards from participation in   
the Company's management bonus plan up to the maximum recognizable compensation 
permitted for qualified pension plans. On October 31, 1994 benefit accrual in   
the pension plan was suspended. The foregoing table reflects the years of       
service, Final Average Compensation, and Covered Compensation as of October 31, 
1995.                                                                           

Mr. Faulkner is a participant in the Pension Plan. Mr. Faulkner is also 
entitled to supplemental retirement benefits. The estimated annual benefits     
payable to Mr. Faulkner under the Pension Plan upon                             

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retirement at age 65 are $8,944, and under his supplemental retirement benefit  
agreement at age 60 are $24,013.                                                

STOCK OPTIONS/SAR GRANTS IN LAST FISCAL YEAR

   There were no new stock option grants for the period ending March 31, 1996.

PERFORMANCE GRAPH 

    Set forth below is a graph comparing the total shareholder returns (assuming
reinvestment of dividends) of the Company, the NASDAQ US & Foreign Composite    
Index, and the NASDAQ Computer Manufacturers Sector Index. The graph assumes    
$100 invested in the Company and the two indices on March 28, 1994, the day on  
which the Common Stock, in the form of ADRs, began trading on the NASDAQ        
National Market System.                                                         

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC                     

                                                                [Download Table]

          MEMOREX TELEX N.V.   NASDAQ US & FOREIGN    NASDAQ HARDWARE MFG.  
                                                                            
3/28/94                100.00                    100                  100.00
6/30/94                 46.97                     95                   81.08
9/30/94                 14.38                    103                   98.58
12/31/94                 9.09                    101                  113.28
3/31/95                  9.47                    110                  119.42
6/30/95                 25.00                    128                  145.23
9/30/95                 15.81                    141                  174.74
12/31/95                10.81                    142                  178.45
3/31/96                 12.12                    149                  183.95

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS, MANAGEMENT BOARD AND
SUPERVISORY BOARD MEMBERS, AND NOMINEES TO MANAGEMENT BOARD 

The following table sets forth information as of August   , 1996, with  
respect to the beneficial ownership of shares of the Common Stock by all persons
believed by the Company to be the beneficial owner of more than 5% of the       
outstanding shares of the Common Stock, by members of the Management Board and  
Supervisory Board, by nominees for the Management Board, and by all Named       
Executive Officers, all members of the Management Board and Supervisory Board   
and the nominee for the Supervisory Board as a group. The information set forth 
below is based upon the Company's records, and information obtained by the      
Company from the persons named below.                                           

                                                        [Enlarge/Download Table]

                                                                                         NUMBER OF              
                                                                                          SHARES                
                                                                                        BENEFICIALLY PERCENT OF 
NAME AND ADDRESS OF BENEFICIAL OWNER                                                       OWNED      CLASS(1)  
--------------------------------------------------------------------------------------  -----------  -----------
                                                                                                                
Apollo Investment Fund, L.P...........................................................                          
  c/o CIBC Bank and Trust Company                                                                               
    (Cayman) Limited                                                                                            
  Edward Street                                                                                                 
  Georgetown, Grand Cayman                                                                                      
  Cayman Islands                                                                                                
  British West Indies                                                                                           
    -and-                                                                                                       
Lion Advisors, L.P....................................................................   4,255,279(2)     14.38%
  Two Manhattanville Road                                                                                       
  Purchase, New York 10577                                                                                      
Carl C. Icahn.........................................................................   2,201,248(3)      7.44%
  114 W. 47th Street                                                                                            
  New York, N.Y. 10036                                                                                          
Hon. Peter H. Dailey..................................................................     250,000(4)          *
David J. Faulkner.....................................................................     150,000(5)          *
Brad Sowers...........................................................................      30,000(6)          *
Gregory S. Wood.......................................................................      35,000(7)          *
Anthony J. Barbieri...................................................................      35,000(8)          *
All Named Executive Officers, members of the Management Board and Supervisory Board                             
  and nominee for the Supervisory Board, as a group (12 persons)......................   1,075,000(9)      3.63%

------------------------                                                        

(1) Based upon the aggregate number of shares of Common Stock outstanding and   
the number of shares of Common Stock issuable upon exercise of stock    
 subscription warrants (the "$2.00 Warrants") to purchase shares of Common
    Stock at $2 per share, issuable upon exercise of stock subscription warrants
    (the "$14.00 Warrants") to purchase shares of Common Stock at $14 per share,
and issuable upon exercise of stock options granted under the Company's 
Stock Option Plan.                                                      

(2) Includes (i) 3,465,847 shares of Common Stock, (ii) 512,148 shares of Common
   Stock issuable upon exercise of $2.00 Warrants, and (iii) 277,284 shares of
 Common Stock issuable upon exercise of $14.00 Warrants. Apollo Investment
beneficially owns 904,738 shares of Common Stock, $2.00 Warrants        
representing the right to purchase 134,840 shares of Common Stock, and  
  $14.00 Warrants representing the right to purchase 59,479 shares of Common
Stock. AIF beneficially owns 601,219 shares of Common Stock and $2.00   
  Warrants representing the right to purchase 89,604 shares of Common Stock.
The managing general partner of both Apollo Investment and AIF is Apollo
Advisors, and the                                                       

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  administrative general partner of both Apollo Investment and AIF is Apollo
Fund Administration Limited. Lion Advisors beneficially owns, for the   
  benefit of certain managed investment accounts, 1,959,853 shares of Common
  Stock, $2.00 Warrants representing the right to purchase 287,704 shares of
    Common Stock, and $14.00 Warrants representing the right to purchase 217,805
   shares of Common Stock. Lion Advisors has sole voting and dispositive power
with respect to such managed investment accounts.                       

(3) Includes (i) 2,065,541 shares of Common Stock, and (ii) 135,707 shares of   
Common Stock issuable upon exercise of $14.00 Warrants. Tortoise Corp.  
("Tortoise") beneficially owns 2,187,075 shares of Common Stock, and    
Chelonian Corp. ("Chelonian") beneficially owns 14,173 shares of Common 
   Stock (including in each case shares of Common Stock issuable upon exercise
of $14.00 Warrants). Tortoise is a wholly-owned subsidiary of Chelonian.
Chelonian is a wholly-owned indirect subsidiary of Highcrest Investors  
   Corp., which is approximately 99.5% owned by Icahn Holding Corporation. Mr.
Icahn is the sole stockholder of Icahn Holding Corporation.             

(4) Includes 250,000 shares of Common Stock issuable upon exercise of stock     
options granted under the Company's Stock Option Plan.                  

(5) Includes 150,000 shares of Common Stock issuable upon exercise of stock     
options granted under the Company's Stock Option Plan.                  

(6) Includes 30,000 shares of Common Stock issuable upon exercise of stock      
options granted under the Company's Stock Option Plan.                  

(7) Includes 35,000 shares of Common Stock issuable upon exercise of stock      
options granted under the Company's Stock Option Plan.                  

(8) Includes 35,000 shares of Common Stock issuable upon exercise of stock      
options granted under the Company's Stock Option Plan.                  

(9) Includes 1,075,000 shares of Common Stock issuable upon exercise of stock   
options granted under the Company's Stock Option Plan. Does not include 
 4,255,242 shares of Common Stock beneficially owned by Apollo Investment,
   AIF, and Lion Advisors, with which Messrs. Gross and Harris are associated.
    See "Supervisory Board--Members of the Supervisory Board." Messrs. Gross and
Harris disclaim beneficial ownership of the shares of Common Stock owned
beneficially by Apollo Investment, AIF, and Lion Advisors.              

* Less than 1%.                                                               

STATUTORY ANNUAL REPORT 
AND 
MANAGEMENT REPORT 

    A copy of the Management Report is attached to this Proxy Statement as ANNEX
I. The annual financial statements of the Company for the fiscal year ended     
March 31, 1996, and the related report of Ernst & Young LLP, United States      
auditors of the Company, are contained in the Annual Report on Form 10-K of the 
Company filed with the Securities and Exchange Commission. A copy of the Annual 
Report on Form 10-K is attached to this Proxy Statement as ANNEX II. The        
consolidated financial statements contained in the Annual Report on Form 10-K   
were prepared in accordance with U.S. generally accepted accounting principles, 
but are substantially similar to the consolidated financial statements prepared 
in accordance with generally accepted accounting standards in the Netherlands   
and contained in the Statutory Annual Report. The Company will make the         
Statutory Annual Report available for inspection by the stockholders of the     
Company at its offices at Hoogoorddreef 9, 1101 BA Amsterdam, The Netherlands.  
Stockholders may also obtain a copy of the Statutory Annual Report by writing to
Memorex Telex Corporation, 545 East John Carpenter Freeway, Irving, Texas 75062.
The Articles of Association provide                                             

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that the unconditional adoption of the annual financial statements will release 
managing directors from liability for the management attached to the annual     
financial statements, and will release the Supervisory Board from liability for 
its supervision thereof. The Supervisory Board urges the stockholders to read   
and consider carefully the annual financial statements contained in the Annual  
Report on Form 10-K and the Management Report. THE SUPERVISORY BOARD RECOMMENDS 
A VOTE FOR THE ADOPTION OF THE ANNUAL FINANCIAL STATEMENTS.                     

APPOINTMENT OF AUDITORS 

    The Supervisory Board has selected the firm of Ernst & Young LLP to serve as
United States auditors for the Company for the fiscal year ending March 31,     
1997. Ernst & Young LLP has served as the Company's United States auditors since
December 1986. The Supervisory Board has also selected the firm of Moret, Ernst 
& Young to serve as the Netherlands auditors for the Company for the fiscal year
ending March 31, 1997. Moret, Ernst & Young has served as the Company's         
Netherlands auditors since December 1986. Representatives of Moret, Ernst &     
Young will be present at the Meeting. THE SUPERVISORY BOARD RECOMMENDS A VOTE   
FOR THE APPOINTMENT OF AUDITORS IN ACCORDANCE WITH THESE SELECTIONS.            

STOCKHOLDER PROPOSALS 

It is presently contemplated that the 1997 Annual General Meeting of    
Stockholders will be held on or about September 30, 1997. Proposals by          
stockholders intended for inclusion in the proxy statement to be furnished to   
all stockholders entitled to vote at the next annual meeting of the Company must
be received at the Company's principal offices not later than May 2, 1997. In   
order to curtail controversy as to the date on which a proposal was received by 
the Company, it is suggested that proponents submit their proposals by certified
mail, return receipt requested.                                                 

OTHER MATTERS 

Stockholders may obtain without charge additional copies of the Annual  
Report on Form 10-K or copies of the Statutory Annual Report by writing to      
Memorex Telex Corporation, 545 East John Carpenter Freeway, Irving, Texas 75062.

   The Supervisory Board does not know of any other matters to be presented at
the Meeting. If other matters properly come before the Meeting, the Depositary, 
through its nominee or nominees, intends to vote thereon in accordance with its 
judgment.                                                                       

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REPORT OF THE BOARD OF MANAGING DIRECTORS 

GENERAL                                                                         

Memorex Telex N.V. and its subsidiaries (the "Company") is a provider of
information technology solutions including the distribution and integration of  
data network and storage products and the provision of related services. The    
market for information technology solutions includes the sales and leasing of   
network and storage products along with the provision of design, integration and
support services. Memorex Telex N.V., a Netherlands corporation, is a holding   
company that operates its business through subsidiaries in eighteen countries   
and with distributors in other countries.                                       

   The Company is continuing a comprehensive strategic transformation to adapt
to the structural changes occurring in the information technology marketplace.  
The Company was formerly a manufacturer of plug compatible peripherals,         
principally for the mainframe environment. As part of this continuing           
transformation, the Company has eliminated product manufacturing, migrated      
engineering to a sustaining role, reduced headcount, consolidated executive     
functions and streamlined its sales organization.                               

 Today, the Company is a worldwide distributor of data network and storage
solutions and provider of a full range of information technology services. The  
Company's ability to provide these products and services originates from its    
multinational distribution network and sales force, extensive service           
organization, reorganized expertise in key technologies and relationships with  
key industry suppliers.                                                         

During the year ended March 31, 1996, the Company's net loss, excluding 
non-cash charges for depreciation, amortization, debt discount accretion and    
gain from sale of assets, provided cash of USD 2.5 million. Cash was also       
provided from the sale of assets discussed in Note 7 (USD 13.9 million), a      
decrease in accounts receivable (USD 5.2 million) and a term loan discussed in  
Note 9 (USD 12.0 million). The existing cash and cash sources were primarily    
used for workforce reductions, closure costs and unfavorable contractual        
obligations as discussed in Note 14 (USD 27.3 million), reductions in royalty   
obligations (USD 3.8 million), capital expenditures (USD 4.9 million), reduced  
deferred revenues on contract maintenance and warranty obligations (USD 5.2     
million) and cash income tax payments (USD 2.4 million). As a result of the     
above, cash and cash equivalents, including restricted cash deposits, decreased 
USD 10.0 million.                                                               

  The Company continues its transformation from a developer and manufacturer
of computer hardware to a provider of networking and storage solutions. As part 
of this transformation, the Company continues to re-engineer its selling,       
service, product development, fulfillment, and finance and administrative       
processes. This effort has resulted in workforce reductions, the consolidation  
of functions, disposition of certain facilities, and closure or sale of         
unprofitable operations. The cost of these initiatives, together with the       
cumulative decline in revenues and gross margins, has impeded operating cash    
flow during the second half of the year and particularly during the fourth      
quarter. This decline in liquidity has negatively impacted the Company's ability
to fulfill customer orders on a timely basis.                                   

    The Company sold its Asia/Pacific operations for USD 25 million. The Company
also reached an agreement with the lenders to its USD 100 million Restructured  
Credit Facility (the "Credit Facility") for USD 9 million of the proceeds to be 
used to reduce debt and the remaining USD 16 million to be used to meet working 
capital requirements including accrued interest payments.                       

The agreement with the lenders to its Credit Facility cures events of   
default that existed under this agreement at March 31, 1996 and includes a      
deferral through October 31, 1996 of interest payments otherwise due prior to   
such date. In connection with the amendments and waivers, the Company agreed to 
a modification of the Credit Facility to include a change in maturity date from 
December 31, 1998 to March 31, 1997, a change in the amortization schedule and  
certain other conditions. The Company has also obtained waivers of existing     
events of default under the USD 12 million Term Loan and Guaranty Agreement.    

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  The proceeds from the sale of the Asia/Pacific operations and the deferral
of interest payments will improve short-term liquidity, assisting the Company in
its efforts to expedite new solution introductions, fulfill customer orders and 
enhance worldwide customer satisfaction.                                        

    The Company continues discussions with financial and strategic investors and
financial institutions concerning a new credit facility or other financing to   
repay the amounts owing under the Credit Facility and for working capital. In   
addition, the Company will continue to emphasize working capital management,    
particularly accounts receivable and inventory as potential sources of cash. The
Company expects to also pursue other non-operating sources of funds such as     
increased factoring of accounts receivable, increased subsidiary lines of       
credit, or if necessary, undertake an asset disposition program.                

The Company believes that operating cash flow, non-operating sources of 
funds, and other new financing will enable the Company to continue to meet its  
obligations. However, there is no assurance that management's plans will be     
successful or what other actions might be necessary.                            

    YEAR ENDED MARCH 31, 1996 ("FISCAL 1996") COMPARED WITH THE YEAR ENDED MARCH
31, 1995 ("FISCAL 1995")                                                        

The Company's 1996 operating income, excluding the amortization of      
intangibles and revaluation of reorganization intangibles has declined from USD 
40.3 million and USD 55.7 million for fiscal 1995 and 1994, respectively, to USD
17.0 million in fiscal 1996. However, the Company has reported three consecutive
years of operating income, excluding amortization of intangibles and revaluation
of reorganization costs. Despite some progress, the transformation of the       
business and corresponding improved operating results have been slower than     
originally anticipated. Fiscal 1996 results did not achieve the operating levels
achieved in fiscal 1995, primarily as a result of shortfalls in anticipated     
revenues and margins.                                                           

   The following table sets forth the Company's revenues and gross margins for
its product groups for fiscal 1996 and fiscal 1995 (USD in millions):           

                                                                [Download Table]

                                                                        GROSS   
                                            REVENUES    GROSS MARGIN   MARGIN % 
                                          ------------  ------------  ----------
                                          1996   1995   1996   1995   1996  1995
                                          -----  -----  -----  -----  ----  ----
                                                                                
Networks................................  397.2  433.7   92.1  122.4  23.2  28.2
Storage.................................   66.3   96.2   18.2   30.9  27.5  32.1
Service.................................  346.1  351.6   82.6   96.6  23.9  27.5
Other...................................   24.5   28.3    9.6    8.8  39.2  31.1
                                          -----  -----  -----  -----  ----  ----
Total...................................  834.1  909.8  202.5  258.7  24.3  28.4
                                          -----  -----  -----  -----  ----  ----
                                          -----  -----  -----  -----  ----  ----

    Networks revenues and gross margins declined when compared to fiscal 1995 as
sales of network connectivity products have grown 31% but not enough to offset  
the 26% decline in the sales of traditional fixed function display and mainframe
network products. While revenues from personal computer products have remained  
relatively unchanged in the current year, gross margin dollars have experienced 
a decline of 16% due to price competition. The decline in sales of traditional  
fixed function display and mainframe network products was in line with Company  
expectations as the market place continues to move quickly to open systems.     
Since these products are among the Company's highest margin products, the       
decline in their revenues had a significant unfavorable impact on gross margin  
dollars and percentages in fiscal 1996. The Company expects growth in the sales 
of network connectivity products next year as the market continues to move to   
open systems.                                                                   

 Storage revenues declined 31% in fiscal 1996 compared to fiscal 1995. The
decline was primarily attributed to decreased sales of stand-alone tape and tape
library products in the current year. Sales of midrange storage products were   
adversely affected by the Company's delayed launch of new products and          
competitor announcements of new advanced products which further slowed sales.   
Storage margins as a                                                            

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percentage of revenues when compared to the prior year declined in the current  
year primarily as a result of price competition.                                

Service revenues have decreased slightly in fiscal 1996 when compared to
fiscal 1995 as the growth in advanced services revenue was exceeded by the      
decline in revenues from traditional maintenance. Service gross margins as a    
percentage of revenues declined as a result of increased price competition and  
the change in mix of services provided. In fiscal 1996, margins suffered as the 
decline in high margin traditional maintenance contracts has largely been       
replaced with lower margin subcontracted services for cabling and third party   
maintenance contracts partially offset by increased revenues from higher margin 
advanced services products such as network design, support and installation. The
Company expects the continued erosion of traditional maintenance contract       
revenues and continued growth in the advanced services market. To capitalize on 
the Company's strengths and reduce the gross margin impact of these trends, a   
highly-trained and experienced consulting services group has been established to
especially focus resources and target opportunities to provide services to the  
higher margin segments of the growing advanced services market.                 

   Other revenues have declined in the current year as a result of declines in
brokerage and media, while margins were relatively flat due to the increase of  
higher margin revenues.                                                         

  The Company estimates that the weaker U.S. dollar, compared with the prior
year, favorably affected revenues approximately USD 24.6 million and margins    
approximately USD 9.1 million in the current year.                              

Selling, general and administrative expenses in fiscal 1996 declined USD
35.7 million compared to fiscal 1995. The decline reflects the impact of        
re-engineering processes to reduce administrative costs and reductions provided 
by the Company's transition from a hardware manufacturer to a solutions provider
which requires less investment in development and engineering. Additionally, the
continued effect of the Company's cost reduction programs have favorably        
affected selling, general and administrative expenses in the current year. The  
weaker U.S. dollar, compared with the prior year, unfavorably affected selling, 
general and administrative expenses by approximately USD 4.5 million compared   
with fiscal 1995.                                                               

Management will continue to take actions to reduce operating costs to a 
level commensurate with the level of expected future revenues.                  

   Other income and expenses for fiscal 1996 reflect a net other income of USD
4.5 million, compared with a net other expense of USD 2.5 million in fiscal     
1995. The increase in the current year is attributed to increased foreign       
currency gains and gains recognized from the sale of assets.                    

Interest expense has declined slightly compared with the prior year.    
Interest includes amounts paid with respect to off balance sheet financing of   
accounts receivable. Due to an amendment entered into during the fourth quarter 
of fiscal year 1996, the potential discount available under the Credit Facility 
was eliminated and, as such, the Credit Facility debt was adjusted to reflect   
the full principal amount due, thereby resulting in a charge to expense of USD  
12.8 million. The Company accreted USD 7.9 million during fiscal 1996 for the   
loss of debt forgiveness prior to the signing of the amendment in the fourth    
quarter.                                                                        

    The Company does not believe that inflation has had a material impact on its
results of operations. Certain actions discussed above were concluded subsequent
to the date when the following consolidated financial statements were prepared. 

BOARD OF MANAGING DIRECTORS                                                     

AMSTERDAM, AUGUST 13, 1996                                                      

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--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

     UNITED STATES
      SECURITIES AND EXCHANGE COMMISSION
     Washington, D.C.  20549
      --------------------------------------

     FORM 10-K
(MARK ONE)                                                                      
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE    
ACT OF 1934 [FEE REQUIRED]                                              

      FOR THE FISCAL YEAR ENDED MARCH 31, 1996

      OR

/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES         
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]                                  

      COMMISSION FILE NUMBER 0-19862

      ----------------------------------------------------------------
      MEMOREX TELEX N.V.
      (Exact name of registrant as specified in its charter)

       THE NETHERLANDS                                  NOT APPLICABLE
(State or other jurisdiction of                          (I.R.S. employer 
    incorporation or organization)                        identification number)

     545 EAST JOHN CARPENTER FREEWAY
      IRVING,  TEXAS  75062-3931
      TELEPHONE NO.:  (214) 444-3500
     (Address, including Zip Code, and telephone number,
     including area code, of authorized representative in United States)
      ----------------------------------------------------------------

     SECURITIES REGISTERED PURSUANT TO SECTION 12 (b) OF THE ACT: NONE
      SECURITIES REGISTERED PURSUANT TO SECTION 12 (g) OF THE ACT:

      AMERICAN DEPOSITORY RECEIPTS EVIDENCING AMERICAN DEPOSITORY SHARES
     WHICH REPRESENT COMMON STOCK, 0.10 DFL. NOMINAL VALUE

Indicate by check mark whether the Registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of   
1934 during the preceding 12 months (or for such shorter period that the        
registrant was required to file such reports), and (2) has been subject to      
filing requirements for the past 90 days.  Yes X  No                            
                     ---   ---

Indicate by checkmark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities       
Exchange Act of 1934 subsequent to the distribution of securities under a plan  
confirmed by a Court. Yes X  No                                                 
---   ---                     

The aggregate market value of the voting stock held by non-affiliates of
the registrant at May 31, 1996 was $36,110,397.                                 

  The number of shares of the registrant's Common Stock,   0.10 DFL. Nominal
Value, outstanding as of May 31, 1996 was  25,076,665.                          

      DOCUMENT INCORPORATED BY REFERENCE: NONE
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
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      Memorex Telex N.V.

     Index to Annual Report on Form 10-K
      For the Fiscal Year Ended March 31, 1996

                                                                            Page
                                                                            ----
      PART I

Item 1.    Business. . . . . . . . . . . . . . . . . . . . . . . . . . . .   1  
Item 2.    Properties. . . . . . . . . . . . . . . . . . . . . . . . . . .   6  
Item 3.    Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . .   6  
Item 4.    Submission of Matters to a Vote of Security Holders . . . . . .   6  

     PART II

Item 5.    Market for Registrant's Common Stock and Related                     
         Stockholder Matters . . . . . . . . . . . . . . . . . . . . . .   7
Item 6.    Selected Financial Data . . . . . . . . . . . . . . . . . . . .   7  
Item 7.    Management's Discussion and Analysis of Financial Condition          
         and Results of Operations . . . . . . . . . . . . . . . . . . .   9
Item 8.    Financial Statements and Supplementary Data . . . . . . . . . .  15  
Item 9.    Changes in and Disagreements with Accountants on Accounting          
         and Financial Disclosure. . . . . . . . . . . . . . . . . . . .  15

      PART III

Item 10.   Directors and Executive Officers of the Registrant. . . . . . .  16  
Item 11.   Executive Compensation. . . . . . . . . . . . . . . . . . . . .  19  
Item 12.   Security Ownership of Certain Beneficial Owners and                  
         Management. . . . . . . . . . . . . . . . . . . . . . . . . . .  22
Item 13.   Certain Relationships and Related Transactions. . . . . . . . .  23  

     PART IV

Item 14.   Exhibits, Financial Statement Schedules, and Reports                 
         on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . .  24
         Signatures. . . . . . . . . . . . . . . . . . . . . . . . . . .  57

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      PART I

ITEM 1.   BUSINESS                                                              

GENERAL                                                                         

Memorex Telex N.V. and its subsidiaries (the "Company") is a provider of
information technology solutions including the distribution and integration of  
data network and storage products and the provision of related services.  The   
market for information technology solutions includes the sales and leasing of   
network and storage products along with the provision of design, integration and
support services.  Memorex Telex N.V., a Netherlands corporation, is a holding  
company that operates its business through subsidiaries in eighteen countries   
and with distributors in other countries.                                       

        Data network and storage equipment are fundamental building blocks for
the information technology environments of large organizations.  Networking     
products provide the infrastructure that allows users to communicate with       
applications, other users and systems inside or increasingly outside of their   
enterprise.  Storage products provide solutions that address the growing        
requirements for the retention or backup of data.  Advances in technology and   
the multivendor environment created by the implementation of open systems have  
created a knowledge gap in the marketplace and fueled the growing requirement   
for design, integration and support service expertise.                          

   The Company is continuing a comprehensive strategic transformation to adapt
to the structural changes occurring in the information technology marketplace.  
The Company was formerly a manufacturer of plug compatible peripherals,         
principally for the mainframe environment.  As part of this continuing          
transformation, the Company has eliminated product manufacturing, migrated      
engineering to a sustaining role, reduced headcount, consolidated executive     
functions and streamlined its sales organization.                               

 Today, the Company is a worldwide distributor of data network and storage
solutions and provider of a full range of information technology services.  The 
Company's ability to provide these products and services originates from its    
multinational distribution network and sales force, extensive service           
organization, reorganized expertise in key technologies and relationships with  
key industry suppliers.                                                         

MARKETS                                                                         

The Company, through its approximately 830 sales and marketing personnel
and indirect sales channels provides a range of networking, storage and service 
solutions to Fortune 1000 corporations and their foreign equivalents, large     
state institutions and government agencies, the financial community, and major  
medical facilities.                                                             

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PRODUCTS AND SERVICES                                                           

   The Company is a provider of information technology solutions including the
distribution and integration of data network and storage products and the       
provision of related services.                                                  

NETWORKS                                                                        

   Network solutions consist of desktop, connectivity, and server products and
related design, integration and support services.  These solutions are typically
utilized as part of a client enterprise network infrastructure.  The Company's  
networking strategy emphasizes complete end to end connectivity across diverse  
hardware platforms, operating systems and communications standards.  The sale of
the network products described in the following paragraphs represented          
approximately 48% of the Company's revenues for its fiscal year ended March 31, 
1996.                                                                           

Desktop products include fixed function displays, personal computers,   
emulators, and printers for attachment and access to multiple network           
environments.  The Company distributes a line of displays with a wide variety of
features.  The Company also distributes personal computers of varying processor 
types for use in networks or as independent personal computing devices.  These  
personal computers are configured through third parties.  The Company markets   
terminal emulation products for a wide variety of network types. The Company    
also offers a wide variety of printers utilizing both impact and nonimpact      
technology.  These printers can communicate with a mainframe via a network      
controller, can connect directly to midrange systems or local area networks     
("LANs"), or can attach to a display or desktop personal computer for local     
output.                                                                         

Connectivity products provide the infrastructure necessary to manage and
support client/server networks and integrate multiple network environments.  The
products include network controllers, gateways, interface cards, wiring hubs,   
bridges and routers.  Network controllers connect LANs to host/servers.         
Gateways enable communication between different network architectures.  Network 
interface cards, wiring hubs, bridges and routers form the network              
infrastructure necessary to connect, manage and support client/server open      
systems applications.                                                           

Server products offer a range of single and multiple-processor servers  
sourced from the industry's leaders in this technology.  Servers are powerful   
central processing units ("CPUs") that provide file and application sharing as  
well as storage services to networks. The Company offers a complete range of    
products in the market for midrange and super servers.  Midrange servers are    
designed to be an open systems device for small to medium sized networks which  
provide services such as file and print serving capabilities at a low cost with 
PC compatibility.  Super servers are a class of server designed to make use of  
standard microprocessor, memory, and storage components as well as industry-    
standard network and peripheral interfaces to provide high performance and      
reliability.  Super servers have a PC's ease of  use and speed to meet a variety
of enterprise computing and communications needs.                               

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STORAGE                                                                         

  Storage solutions sold by the Company include multi-platform disk and tape
cartridge subsystems, automated tape libraries, software and related services   
for comprehensive data storage throughout multiple environments.  These storage 
products are designed for attachment to large and midrange CPUs and contain     
controllers to manage the flow of information between the CPU and the storage   
device.  The Company currently sells tape drives and automated tape libraries to
the large systems market, and disk, tape and automated tape libraries to the    
midrange systems market. The sale of storage products represented approximately 
8% of the Company's revenues for fiscal 1996.                                   

SERVICES                                                                        

 The Company's service offerings are targeted at providing a full range of
services that add value to its network and storage solutions as well as         
providing critical on-going support for customer environments.  These services  
are focused in four key areas:                                                  
STRATEGIC SERVICES, including full-scale capabilities for planning,     
designing, building, and managing network systems;                      
 INTEGRATION SERVICES, including connectivity and implementation services,
and cabling;                                                            
EDUCATION SERVICES, including a full range of learning methods and      
conventional training for customers;                                    
PERFORMANCE CONTROL SERVICES, including traditional services such as    
contract maintenance of time and materials service for the Company's    
 networks and storage products, third-party maintenance of other equipment
manufacturer's products, as well as services that monitor, diagnose, and
correct network problems.                                               

Service revenues represented approximately 42% of the Company's revenues
for fiscal 1996.                                                                

GEOGRAPHIC INFORMATION                                                          

Information regarding the Company's operations by geographic area is    
included herein under Item 14(a), of the March 31, 1996 Consolidated Financial  
Statements in Note 14 entitled "Geographic Data".                               

BACKLOG                                                                         

   At March 31, 1996, the Company had a backlog of $57.3 million compared with
a backlog of $56.6 million at March 31, 1995.  The Company expects to fulfill   
its March 31, 1996 backlog within the current fiscal year.  The Company's       
backlog is principally related to the sale of network and storage products, and 
does not include ongoing operating lease contracts or maintenance contracts for 
service of installed equipment.                                                 

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RESEARCH AND DEVELOPMENT                                                        

  The Company has a research and development program principally relating to
the design of selected network products and the development of software for     
storage systems.  The Company expensed approximately $12.4 million, $15.7       
million, and $25.6 million on research and development in the fiscal years ended
March 31, 1996, 1995 and 1994, respectively.  The Company has reduced research  
and development expenses by relying on outside vendors and will continue to     
transition this function to primarily continuation engineering.                 

COMPETITION                                                                     

  There are a large number of competitors that provide data network, storage
and service solutions.  Competitors include divisions of vertically integrated  
manufacturers, local and national distributors, consulting firms and system     
integrators such as Compucom and Vanstar.  In addition, other small companies   
compete with the Company in the sale of displays, controllers and printers to   
the communications market.  Various companies, including IBM and Storage        
Technology Corporation, compete with the Company in the sale of storage         
peripherals.  In the service market, the Company competes with the service      
operations of proprietary hardware manufacturers and third party service        
providers.  There are a large number of competitors that supply personal        
computers and other networking products to business users.  The Company also    
competes with a number of system integrators in the delivery of network and     
storage solutions.  The Company believes that product performance, service      
capabilities and pricing are the principal elements of competition within the   
various areas of the computer industry.                                         

CUSTOMERS                                                                       

 The Company's customers are generally Fortune 1000 corporations and their
foreign equivalents, large state institutions and government agencies, the      
financial community, and major medical facilities that use large or midrange    
systems, personal computers, or LANs to meet their data processing needs.       
Typically, the Company's customers are substantial companies, institutions and  
agencies with whom the Company has had long-term business relationships. None of
the Company's customers accounted for more than 10% of the Company's gross      
revenues for fiscal 1996.                                                       

SUPPLIERS                                                                       

The Company has developed a series of strategic relationships with      
suppliers which enable the Company to obtain a wide range of technology.  With  
this bias-free approach, the Company implements the best available and most     
appropriate products and services on behalf of its customers.  Since  most      
products are sourced from third-party vendors, these arrangements limit the     
Company's technological risk. Although alternative suppliers are available for  
most of the Company's product offerings, the termination of a principal supplier
for a specific product might adversely affect the Company within a product area.
However, there is no single source or group of suppliers which is material to   
the Company as a whole, and none of the Company's                               

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product offerings for which there are no alternative suppliers is material to   
the Company as a whole.                                                         

EMPLOYEES AND LABOR RELATIONS                                                   

None of the Company's approximately 4,100 employees are covered by a    
collective bargaining agreement.  The Company considers its labor relations to  
be good.                                                                        

TRADEMARKS                                                                      

The Company owns several trademarks, including the Memorex-Registered   
Trademark- and Telex-Registered Trademark- names.  Substantially all products   
sold by the Company are sold under the Memorex Telex-Registered Trademark- name.
In connection with the sale by a predecessor corporation of its consumer        
products division to Tandy Corporation in 1982, the predecessor corporation     
granted to Tandy Corporation an exclusive limited license to use the            
Memorex-Registered Trademark- trademark and designs in sales of certain consumer
products, including audio and video tapes.  In December 1993, the Company       
consented to the assignment of the license by Tandy Corporation to Hanny        
Magnetics (B.V.I.) Ltd. ("Hanny").  The license expires on December 31, 2011;   
however, Hanny may extend the term of the license for an additional 30 years    
by payment of $3 million to the Company.  In October 1993, in connection with   
the sale of the Memorex Computer Supplies business in Europe to Boeder AG,      
the Company granted an exclusive limited license to use the                     
Memorex-Registered Trademark- trademark (and other marks owned by the           
Company) in the sale of computer media products and computer related supplies   
and accessories.  The license is terminable upon twenty-four months prior       
notice, but in no event prior to October 1, 2003.  In December 1993, in         
connection with the sale of the Memorex Computer Supplies businesses in the     
United States and Canada to Hanny, the Company granted an exclusive limited     
license to use the Memorex-Registered Trademark- trademark in the sale of       
computer media products and computer related supplies and accessories.  The     
term of the license is until December 31, 2013 and is renewable upon the        
mutual agreement of the Company and Hanny.  In February 1995, the Company       
entered into an agreement with Hanny and BASF PLC to license BASF to use the    
Memorex-Registered Trademark- trademark and design in the sale of audio and     
video tape and related products during a period of three years in a territory   
comprising the member states of the European Union and certain other            
countries.  In May 1989, in connection with the sale of the assets of Telex     
Communications, Inc., the Company has granted a royalty free perpetual          
license to use the Telex-Registered Trademark- name and a royalty bearing       
license until 1999 to use the Memorex-Registered Trademark- trademark in the    
sale of hearing aids.                                                           

REGULATORY MATTERS                                                              

The Company obtains export and import licenses in various countries     
relating to certain products as required.  The Company has not experienced any  
problems in obtaining such licenses and has no reason to believe that problems  
will be encountered in the future. The Company supplies products to and performs
certain maintenance and repair services for the United States government.       

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ITEM 2.  PROPERTIES                                                             

The Company leases approximately 40,000 square feet of office space in  
Irving, Texas for executive offices, and approximately 6,500 square feet of     
office space in Amsterdam, The Netherlands.  The Company operates engineering,  
repair and distribution facilities in Oklahoma, North Carolina, and The         
Netherlands.  The Company owns office space of approximately 184,000 square feet
in Tulsa, Oklahoma, used for the North American Customer Satisfaction Center,   
Network Control Center, training and certain regional sales operations.         

The Company leases 55,000 square feet of office and laboratory space and
50,400 square feet of warehouse and distribution space in Raleigh, North        
Carolina.                                                                       

The Company owns two facilities in The Netherlands, a repair facility in
Gronsveld comprising 50,000 square feet and an office and warehouse facility in 
Beek comprising 85,000 square feet which is leased to a third party. The Company
also owns approximately 59,000 square feet of manufacturing and office space in 
Liege, Belgium, which is leased to third parties.  The Company is attempting to 
sell the facilities leased to third parties.                                    

Additionally, the Company leases offices and storage facilities in the  
United States and in other countries through which it conducts its sales and    
service operations.                                                             

ITEM 3.  LEGAL PROCEEDINGS                                                      

   The Company is a defendant in various lawsuits in which the plaintiffs seek
recovery for repetitive stress injuries allegedly incurred while using keyboards
used in computer systems sold by the Company.  The plaintiffs are proceeding    
against the Company and other suppliers of keyboards under theories of          
negligence and strict products liability.  Certain of the suits contain a claim 
for punitive damages in the amount of $10 million.  The Company has paid no     
settlement amounts with respect to any of these lawsuits.  The Company is       
contesting these actions vigorously, and believes that the probability of an    
unfavorable outcome in excess of available insurance coverage is remote.  In the
event that plaintiffs were to succeed with respect to these claims, the         
aggregate liability of the Company to plaintiffs in these lawsuits is likely to 
exceed available insurance coverage and could have a material adverse impact    
upon the financial position and results of operations of the Company.           

   The Company is involved in various other claims and proceedings incurred in
the ordinary course of business which, in the opinion of management, do not     
involve significant amounts and are not material to the financial position or   
results of operations of the Company.                                           

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                    

None.                                                                   

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     PART II

ITEM 5.  MARKET FOR THE COMPANY'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS  

 The Company's common stock, DFL 0.10 nominal value which is listed on the
NASDAQ National Market System ("NASDAQ") in the form of American Depository     
Receipts ("ADRs"), began trading on a when-issued basis on March 28, 1994, and  
on a regular basis on May 19, 1994 under the NASDAQ symbol MEMXY. The high and  
low closing sales prices on the Company's common stock ranged as follows:       

 QUARTER ENDED          HIGH         LOW
 -------------          ----         ---

June 30, 1994          $  7.13     $  3.78
September 30, 1994        4.00        1.38
December 31, 1994         2.56        0.44
March 31, 1995            1.13        0.34
June 30, 1995             2.53        0.72
September 30, 1995        2.69        1.06
December 31, 1995         1.31        0.50
March 31, 1996            1.38        0.69

   The approximate number of record holders of the Company's ADRs at March 31,
1996 was 114.  Under the terms of the Company's debt agreements, the Company is 
presently restricted from making cash dividend payments.                        

ITEM 6.  SELECTED FINANCIAL DATA                                                

   The selected financial data presented below is denominated in United States
dollars and has been prepared in accordance with United States generally        
accepted accounting principles.                                                 

As more fully described in Note 1 of the March 31, 1996 Consolidated    
Financial Statements, the Company continues to experience declines in revenues  
and gross margins primarily resulting from the decline in liquidity which has   
negatively impacted the Company's ability to purchase product for resale.   As  
more fully described in Note 6, the Company is in default of certain covenants  
under the Credit Facility and the Term Loan, as of March 31, 1996,  and may be  
required to make significant debt repayments during fiscal 1997 (see Note 6 of  
the Financial Statements).  Ernst & Young LLP's opinion indicated that these    
conditions raised substantial doubt about the Company's ability to continue as a
going concern.                                                                  

As more fully described in Note 2 of the March 31, 1996 Consolidated    
Financial Statements, effective March 24, 1994, the Company emerged from        
protection under chapter 11 of the U.S. Bankruptcy Code pursuant to the         
Reorganization Plan.  In accordance with AICPA Statement of Position 90-7, ("SOP
90-7"), the Company adopted fresh start reporting whereby its assets,           
liabilities, and new capital structure were adjusted to reflect fair values as  
of March 31, 1994.  As a result, the Company's consolidated financial           
statements for periods prior to March 31, 1994, are not comparable to           
consolidated financial statements presented on or subsequent to March 31, 1994. 
A similar restructuring was completed March 31, 1992, at which time the Company 
also applied fresh start reporting.  For financial reporting purposes, all      

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balances prior to March 31, 1994 are considered to be related to the Predecessor
Companies.  A black line has been drawn on the financial statements to          
distinguish between the Reorganized Company and Predecessor Companies' balances 
(as defined in Note 2 of the March 31, 1996 Consolidated Financial Statements). 

     SELECTED FINANCIAL DATA
      (In thousands, except per share amounts)

                                                        [Enlarge/Download Table]


                                                       Reorganized Company                  Predecessor Companies                  
                                                   --------------------------   --------------------------------------------       
                                                                             Year Ended March 31,                                  
                                                   -------------------------------------------------------------------------       
                                                       1996           1995     |       1994             1993           1992        
                                                       ----           ----     |       ----             ----           ----        
                                                                               |                                                   
Statement of Operations Data:                                                  |                                                   
  Total revenues                                   $   834,053    $   909,751  |  $  1,015,574      $  1,326,372   $  1,499,146    
  Gross margin                                         202,460        258,724  |       309,914           361,327        457,842    
  Depreciation and amortization of intangibles(1)      235,032        135,171  |        38,359            44,110         60,470    
  Operating income (loss)(2)                          (207,475)       (84,860) |        32,247          (266,783)        14,099    
  Interest expense(1)                                  (19,844)       (20,127) |      (100,433)          (98,224)      (158,371)   
  Loss before income taxes(2)                         (246,738)      (103,904) |      (491,833)         (382,559)      (428,700)   
  Preferred stock dividend requirements of                                     |                                                   
     subsidiaries                                            0              0  |             0                 0         25,498    
  Extraordinary item                                         0              0  |       728,996 (3)             0        601,531 (3)
  Net income (loss)                                   (246,738)      (108,011) |       227,005          (395,822)       104,333    
  Net income (loss) per common share               $     (9.84)   $     (4.32) |       Note 4            Note 4         Note 4     

                                                       Reorganized Company                  Predecessor Companies                  
                                                   --------------------------   --------------------------------------------       
                                                                             Year Ended March 31,                                  
                                                   -------------------------------------------------------------------------       
                                                       1996           1995           1994     |        1993           1992         
                                                       ----           ----           ----     |        ----           ----         
Balance Sheet Data:                                                                           |                                    
  Total assets                                     $   268,168    $   536,466    $   721,253  |    $  1,138,985   $  1,451,804     
  Debt (including debt in default classified           118,273         85,126         94,472  |         811,816        737,323     
        as current)(5)                                                                        |                                    
  Stockholders' equity (deficit)                      (277,351)       (30,827)        75,000  |        (233,970)       175,000     

------------------------------                                                  

(1) Excludes amortization of debt issuance costs for the year ended March 31,   
1992 of $5,652.  Additionally, excludes accretion of debt discount of   
 $20,700, $20,455 and $20,904 for the years ended March 31, 1996, 1994 and
   1993, respectively.  Includes the write-off of the remaining reorganization
value of $99,334 as of March 31, 1996.                                  
(2) Includes reorganization items of $406,536 and $284,328 for the years ended  
March 31, 1994 and 1992, respectively.                                  
(3) Extraordinary gains resulting from reorganizations under prepackaged plans  
for the years ended March 31, 1994 and 1992.                            
(4) Predecessor Companies income (loss) per common share amounts are not        
relevant due to the reorganization under the prepackaged plan.          
(5) Excludes obligations in respect of non-recourse debt secured by leasebase   
 receivables of $1,208 at March 31, 1996, $2,309 at March 31, 1995, $3,315
   at March 31, 1994, $5,982  at March 31, 1993, and $6,075 at March 31, 1992.

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ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS                                                 

LIQUIDITY                                                                       

   During the year ended March 31, 1996, the Company's net loss, excluding the
non-cash charges for depreciation, amortization, debt discount accretion, and   
gain from sale of assets provided cash of $2.5 million.  Cash was also          
provided from the sale of assets discussed in Note 3 ($13.9 million), a decrease
in accounts receivable ($5.2 million), and a term loan discussed in Note 6      
($12.0 million). The existing cash and cash sources was primarily used for      
workforce reductions, closure costs and unfavorable contractual obligations as  
discussed in Note 11 ($27.3 million), reductions in royalty obligations ($3.8   
million), capital expenditures ($4.9 million), reduced deferred revenues on     
contract maintenance and warranty obligations ($5.2 million), and cash income   
tax payments ($2.4 million).  As a result of the above, cash and cash           
equivalents, including restricted cash deposits, decreased $10.0 million.       

  The Company continues its transformation from a developer and manufacturer
of computer hardware to a provider of networking and storage solutions.  As part
of this transformation, the Company continues to reengineer its selling,        
service, product development, fulfillment, and finance and administrative       
processes.  This effort has resulted in workforce reductions, the consolidation 
of functions, disposition of certain facilities, and closure or sale of         
unprofitable operations.  The cost of these initiatives, together with the      
cumulative decline in revenues and gross margins has impeded the operating cash 
flow during the second half of the year and particularly during the fourth      
quarter.  This decline in liquidity has negatively impacted the Company's       
ability to fulfill customer orders on a timely basis.                           

As discussed in Footnote 7, the Company has reached an agreement to sell
its Asia/Pacific operations for $25 million.  The Company believes it has       
reached an agreement in principal with the lenders to its $100 million          
Restructured Credit Facility (the "Credit Facility") for $9 million of the      
proceeds to be used to reduce debt and the remaining $16 million to be used to  
meet working capital requirements including accrued interest payments.          

 As discussed in Footnote 6, the Company believes it also has an agreement
in principal with the lenders to its Credit Facility to cure events of          
default that existed under this agreement at March 31, 1996 and deferral        
through October 31, 1996, of interest payments otherwise due prior to such      
date.  In connection with these agreements with the lenders, the Company will   
agree to a modification of the Credit Facility to include a change in           
maturity date from December 31, 1998 to March 31, 1997, a change in the         
amortization schedule and certain other conditions.  The Company has also       
obtained waivers of existing events of default under the Term Loan subject to   
finalization of the agreement in principal with the Credit Facility lenders.    

  The proceeds from the sale of the Asia/Pacific operations and the deferral
of interest payments will improve short-term liquidity, assisting the Company in
its efforts to expedite new solution introductions, fulfill customer orders     
and enhance worldwide customer satisfaction.                                    

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As discussed in Footnote 1, the Company continues discussions with      
financial and strategic investors and financial institutions concerning a new   
credit facility or other financing to repay the amounts owing under the Credit  
Facility and for working capital.  In addition, the Company will continue to    
emphasize working capital management, particularly accounts receivable and      
inventory as potential sources of cash. The Company expects to also pursue other
non-operating sources of funds such as increased factoring of accounts          
receivable, increased subsidiary lines of credit or, if necessary, undertake an 
asset disposition program.                                                      

The Company believes that operating cash flow, non-operating sources of 
funds, and other new financing will enable the Company to continue to meet its  
obligations, however, there is no assurance that management's plans will be     
successful or what other actions might be necessary.                            

RESULTS OF OPERATIONS                                                           

   TWELVE MONTHS ENDED MARCH 31, 1996 ("FISCAL 1996") COMPARED WITH THE TWELVE
MONTHS ENDED MARCH 31, 1995 ("FISCAL 1995")                                     

The Company's 1996 operating income, excluding the amortization of      
intangibles and revaluation of reorganization intangibles, has declined from    
$40.3 million and $55.7 million for fiscal 1995 and 1994, respectively, to      
$17.0 million in fiscal 1996.  However, the Company has reported                
three consecutive years of operating income excluding amortization of           
intangibles and reevaluation of reorganization costs. Despite some progress,    
the transformation of the business and corresponding improved operating         
results have been slower than originally anticipated.  Fiscal 1996 results      
did not achieve the operating levels achieved in fiscal 1995, primarily as      
a result of shortfalls in anticipated revenues and margins.                     

   The following table sets forth the Company's revenues and gross margins for
its product groups for fiscal 1996 and fiscal 1995 ($ in millions):             

             Revenues              Gross Margin           Gross Margin %
             --------              ------------           --------------
         1996        1995        1996        1995         1996        1995
         ----        ----        ----        ----         ----        ----

Networks    $397.2      $433.7       $92.1      $122.4       23.2%       28.2%  
Storage       66.3        96.2        18.2        30.9       27.5%       32.1%  
Service      346.1       351.6        82.6        96.6       23.9%       27.5%  
Other         24.5        28.3         9.6         8.8       39.2%       31.1%  
        --------    --------    --------    --------    --------    --------
Total       $834.1      $909.8      $202.5      $258.7       24.3%       28.4%  
        --------    --------    --------    --------    --------    --------
        --------    --------    --------    --------    --------    --------

 Networks revenues and gross margins declined when compared to fiscal 1995
as sales of network connectivity products have grown 31% but not enough to      
offset the 26% decline in the sales of traditional fixed function display and   
mainframe network products.  While revenues from personal computer products have
remained relatively unchanged in the current year, gross margin dollars have    
experienced a decline of 16% due to price competition.  The decline in sales of 
traditional fixed function display and mainframe network products was in line   
with Company expectations as the market place continues to move quickly to open 
systems.  Since                                                                 

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these products are among the Company's highest margin products, the decline in  
their revenues had a significant unfavorable impact on gross margin dollars and 
percentages in fiscal 1996.  The Company expects growth in the sales of network 
connectivity products next year as the market continues to move to open systems.

  Storage revenues declined 31% in fiscal 1996 when compared to fiscal 1995.
The decline was primarily attributed to decreased sales of stand-alone tape and 
tape library products in the current year.  Sales of midrange storage products  
were adversely affected by the Company's delayed launch of new products and     
competitor announcements of new advanced products which further slowed sales.   
Storage margins as a percentage of revenues when compared to the prior year     
declined in the current year primarily as a result of price competition.        

Service revenues have decreased slightly in fiscal 1996 when compared to
fiscal 1995 as the growth in advanced services revenue was exceeded by the      
decline in revenues from traditional maintenance.  Service gross margins as a   
percentage of revenues declined as a result of increased price competition and  
the change in mix of services provided.  In fiscal 1996, margins suffered as the
decline in high margin traditional maintenance contracts has largely been       
replaced with lower margin subcontracted services for cabling and third party   
maintenance contracts partially offset by increased revenues from higher margin 
advanced services products such as network design, support, and installation.   
The Company expects the continued erosion of traditional maintenance contract   
revenues and continued growth in the advanced services market.  To capitalize on
the Company's strengths and reduce the gross margin impact of these trends, a   
highly trained and experienced consulting services group has been established to
especially focus resources and target opportunities to provide services to the  
higher margin segments of the growing advanced services market.                 

   Other revenues have declined in the current year as a result of declines in
brokerage and media, while margins were relatively flat due to the increase of  
higher margin revenues.                                                         

 The Company estimates that the weaker U.S. dollar, when compared with the
prior year, favorably affected revenues approximately $24.6 million and margins 
approximately $9.1 million in the current year.                                 

  Selling, general and administrative expenses in fiscal 1996 declined $35.7
million when compared to fiscal 1995.  The decline reflects the impact of re-   
engineering processes to reduce administrative costs and reductions provided by 
the Company's  transition  from a hardware manufacturer to a solutions provider 
which requires less investment in development and engineering.  Additionally,   
the continued effect of the Company's cost reduction programs have favorably    
affected selling, general and administrative expenses in the current year.  The 
weaker U.S. dollar, when compared with the prior year, unfavorably affected     
selling, general and administrative expenses by approximately $4.5 million when 
compared with fiscal 1995.  Management will continue to take actions to reduce  
operating costs to a level commensurate with the level of expected future       
revenues.                                                                       

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Other income and expenses for fiscal 1996 reflect a net other income of 
$4.5 million, compared with a net other expense of $2.5 million in fiscal 1995. 
The increase in the current year is attributed to increased foreign currency    
gains and gains recognized from the sale of assets.                             

 Interest expense has declined slightly when compared with the prior year.
Interest includes amounts paid in respect to off balance sheet financing of     
accounts receivable.  Due to an amendment entered into during the fourth quarter
of fiscal year 1996, the potential discount available under the Credit Facility 
was eliminated and as such, the Credit Facility debt was adjusted to reflect the
full principal amount due, thereby resulting in a charge to expense of $12.8    
million. The Company accreted $7.9 million during fiscal 1996 for the loss of   
debt forgiveness prior to the signing of the amendment in the fourth quarter.   

The Company does not believe that inflation has had a material impact on
its results of operations.                                                      

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   TWELVE MONTHS ENDED MARCH 31, 1995 ("FISCAL 1995") COMPARED WITH THE TWELVE
MONTHS ENDED MARCH 31, 1994 ("FISCAL 1994")                                     

The Company's 1995 operating income, excluding the amortization of      
intangibles and realignment costs, has improved from a loss of $57.0 million in 
fiscal 1993 to a gain of $40.3 million and $55.7 million for fiscal 1995 and    
1994, respectively, all calculated on the same basis.  Fiscal 1995 results did  
not achieve the operating levels achieved in fiscal 1994 nor the operating      
results anticipated in the Company's forecast of operations included in the     
Reorganization Plan, primarily as a result of shortfalls in anticipated revenues
and margins.                                                                    

   The following table sets forth the Company's revenues and gross margins for
its product groups for fiscal 1995 and fiscal 1994 ($ in millions):             

             Revenues              Gross Margin           Gross Margin %
             --------              ------------           --------------
         1995        1994        1995        1994         1995        1994
         ----        ----        ----        ----         ----        ----

Networks    $433.7      $491.3      $122.4      $156.3       28.2%       31.8%  
Storage       96.2       125.2        30.9        34.6       32.1%       27.6%  
Service      351.6       348.1        96.6       107.6       27.5%       30.9%  
Other         28.3        51.0         8.8        11.4       31.1%       22.3%  
        --------    --------    --------    --------    --------    --------
Total       $909.8    $1,015.6      $258.7      $309.9       28.4%       30.5%  
        --------    --------    --------    --------    --------    --------
        --------    --------    --------    --------    --------    --------

 Networks revenues and gross margins declined when compared to fiscal 1994
as sales of network connectivity products have grown 52% but not enough to      
offset the 30% decline in the sales of traditional fixed function display and   
mainframe network products.  Revenues and gross margins from personal computer  
products have remained relatively unchanged in the current year.  The decline in
sales of traditional fixed function display and mainframe network products has  
been faster than expected as the market place continues to move quickly to open 
systems.  Since these products are among the Company's highest margin products, 
the decline in their revenues had a significant unfavorable impact on gross     
margin dollars and percentages in fiscal 1995.  The Company expects the decline 
in revenues from traditional fixed function display and mainframe network       
products and growth in the sales of network connectivity products to continue as
the market continues to move to open systems.                                   

  Storage revenues declined 23% in fiscal 1995 when compared to fiscal 1994.
The decline was primarily attributed to the phase-out sale of mainframe disk    
storage products in the prior year and lower than expected sales of midrange    
storage products in the current year.  Sales of midrange storage products were  
adversely affected by the Company's delayed launch of new products and          
competitor announcements of new advanced products which further slowed sales.   
Storage margins as a percentage of revenues when compared to the prior year     
improved in the current year primarily as a result of improved margins achieved 
on the sale of tape and tape library products and from sales of new disk array  
products.                                                                       

Service revenues have increased slightly in fiscal 1995 when compared to
fiscal 1994 as the growth in advanced services revenue exceeded the decline in  
revenues from traditional maintenance.  Service gross margins as a percentage of
revenues declined however, as a result                                          

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of increased price competition and the change in mix of services provided.  In  
fiscal 1995, margins suffered as the decline in high margin traditional         
maintenance contracts has largely been replaced with lower margin subcontracted 
services for cabling and third party maintenance contracts partially offset by  
increased revenues from higher margin advanced services products such as network
design, support, and installation.  The Company expects the continued erosion of
traditional maintenance contract revenues and continued growth in the advanced  
services market.  To capitalize on the Company's strengths and reduce the gross 
margin impact of these trends, a highly trained and experienced consulting      
services group has been established to especially focus resources and target    
opportunities to provide services to the higher margin segments of the growing  
advanced services market.                                                       

   Other revenues and margins have declined in the current year as a result of
declines in brokerage, media and original equipment manufactured parts sales.   

 The Company estimates that the weaker U.S. dollar, when compared with the
prior year, favorably affected revenues approximately $24.0 million and margins 
approximately $14.0 million in the current year.                                

  Selling, general and administrative expenses in fiscal 1995 declined $32.7
million when compared to fiscal 1994.  The decline reflects the impact of       
re-engineering processes to reduce administrative costs and reductions provided 
by the Company's  transition  from a hardware manufacturer to a solutions       
provider which requires less investment in development and engineering.         
Additionally, the continued effect of the Company's cost reduction programs have
favorably affected selling, general and administrative expenses in the current  
year.  The weaker U.S. dollar, when compared with the prior year, unfavorably   
affected selling, general and administrative expenses by approximately $4.0     
million when compared with fiscal 1994.  Management will continue to take       
actions to reduce operating costs to a level commensurate with the level of     
expected future revenues.                                                       

  Effective October 31, 1994, the Company suspended indefinitely the accrual
of benefits under its U.S. defined benefit pension plan.  This suspension was   
accounted for as a curtailment  under Statement of Financial Accounting         
Standards No. 88, "Employers' Accounting for Settlements and Curtailments of    
Defined Benefit Pension Plans and for Termination Benefits."  This curtailment  
resulted in the Company recording a gain of  $9.7 million during fiscal 1995.   

Other income and expenses for fiscal 1995 reflect a net other expense of
$2.5 million, compared with a net other income of $4.2 million in fiscal 1994.  
The decline in the current year is attributed to increased foreign currency     
losses and a decrease in the gains recognized from the sale of assets.  These   
declines were partially offset by decreased equity losses from investments and  
increased royalty income in the current year.                                   

  Amortization of intangibles significantly increased when compared with the
prior year due to the approval of the Reorganization Plan which required the    
application of "fresh start" reporting for the Company (See Note 2 of the March 
31, 1996 Consolidated Financial Statements).  The Company's reorganization value
in excess of amounts allocated to identifiable assets was amortizing over a     
thirty year period prior to the application of "fresh                           

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start".  The Reorganized Company is amortizing the reorganization value in      
excess of amounts allocated to identifiable assets over a three year period.    
During the fourth quarter of fiscal year 1996, the Company wrote-off the        
reorganization value in excess of amounts allocated to identifiable assets      
(see Note 2 of the March 31, 1996 Consolidated Financial Statements).           

Interest expense has significantly declined when compared with the prior
year due to the successful restructuring of the Company's indebtedness which    
converted a significant portion of debt to equity.  Interest includes amounts   
paid in respect to off balance sheet financing of accounts receivable.          

The Company does not believe that inflation has had a material impact on
its results of operations.                                                      

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                            

Consolidated financial statements for the Company, notes thereto and    
related schedules are annexed hereto as pages 27 through 56.  An index to such  
materials is set forth at page 24.                                              

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON                       
ACCOUNTING AND FINANCIAL DISCLOSURE                                 

None.                                                                   

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      PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT                    

The Company was formed in 1986 under Netherlands law and, since its     
formation, has  had a voluntary two-tier management system consisting of a      
Management Board and a Supervisory Board.  The Management Board is responsible  
for the management and operation of the Company and for its dealings with third 
parties.  Each member of the Management Board  has the power to represent and   
legally bind the Company.  The Supervisory Board assists the Management Board by
rendering advice and supervises the policy of the Management Board and the      
general business of the Company.  Members of the Supervisory Board do not have  
the power to represent or legally bind the Company.  The members of both the    
Management Board and the Supervisory Board are appointed by the stockholders of 
the Company.  Under the laws of the Netherlands, the Company is not required to 
have a Supervisory Board.  The Company maintains the Supervisory Board, which   
may consist only of individuals who are not members of the Management Board, to 
assure adequate supervision of the policy of the Management Board and the       
general business of the Company.                                                

SUPERVISORY BOARD                                                               

The following information is furnished with respect to each incumbent   
member of the Supervisory Board.  All members are citizens of the United States 
and have served on the Supervisory Board since June 1994 except Catherine Y.    
Selleck who was elected to the Supervisory Board on September 30, 1994.  Hon.   
Peter H. Dailey resigned from the Supervisory Board as of March 31, 1996 to     
become the Company's Chief Executive Officer. Each member of the Supervisory    
Board is entitled to receive a $25,000 annual fee and $1,000 per diem (including
travel time) plus reimbursement for all out-of-pocket expenses incurred in      
connection with attendance at meetings of the Supervisory Board and committees  
of the Supervisory Board.  The amount of these fees was set by the stockholders 
of the Company.                                                                 

HON. PETER H. DAILEY, 66, has been the Chairman of Enniskerry Financial 
Ltd. since 1985.  He was previously United States Ambassador to Ireland and     
Special Envoy to NATO, and thereafter was a member of the President's Advisory  
Commission on Arms Control and Disarmament.  He also served as Vice Chairman of 
the Interpublic Group of Companies and the Dailey Group.  Mr. Dailey is         
currently a director of Chicago Title and Trust Company, Sizzler International, 
Inc., Pinkerton's, Inc., and Jacobs Engineering Group Inc.  Also, Mr. Dailey    
previously also served as a director of the Walt Disney Company and the         
Interpublic Group of Companies.                                                 

HAROLD FIRST, 60, has been an independent financial consultant since    
January 1993.  From December 1990 through December 1992, Mr. First was the Chief
Financial Officer of Icahn Holding Corp. Mr. First is currently a director of   
Taj Mahal Realty Corporation, Tel-Save Holdings, Inc. and Cadus Pharmaceutical  
Corporations.  Mr. First also previously served as a director of ACF Industries,
Inc., American Property Investors, Inc., Trans World Airlines, Inc., and Taj    
Majal Holding Corporation.                                                      

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   MICHAEL S. GROSS, 35, is one of the founding principals of Apollo Advisors,
L.P. which, together with certain affiliates, acts as managing general partner  
of Apollo Investment Fund, L.P., AIF II, L.P., and the recently formed Apollo   
Investment Fund III, L.P. (collectively, the "Apollo Funds"), private securities
investment funds, and of  Lion Advisors, L.P. which acts as financial advisor to
and representative for certain institutional investors with respect to          
securities investments.  Prior to 1990, Mr. Gross was an investment banker with 
Drexel Burnham Lambert Incorporated. Mr. Gross is currently a director of Buster
Brown Apparel, Inc., Converse, Inc., The Florsheim Shoe Company, Furniture      
Brands International, Inc., Profitt's, Inc., and UROHEALTH, Inc.                

JOSHUA J. HARRIS, 32, has been a limited partner of Apollo Advisors and 
Lion Advisors since 1990.  Apollo Advisors, together with certain affiliates,   
acts as managing general partner of the Apollo Funds.  Lion Advisors acts as    
financial advisory to and representative for certain institutional investors    
with respect to securities investments.  Mr. Harris is currently a director of  
Brueners Home Furnishings, Inc., Converse, Inc., The Florsheim Shoe Company,    
Inc., and Furniture Brands International, Inc.                                  

WALTER J. HUMANN, 58, has been with Hunt Consolidated, Inc., since 1975.
During that period he has held various executive positions, including Director, 
Chief Operating Officer, and Chairman of the Executive Committee.  Earlier, he  
was Vice President for commercial operations, LTV Corporation.  He has degrees  
from M.I.T., Harvard Business School, and SMU Law School.   Mr. Humann is       
currently a director of  the RAND Corporation.  Mr. Humann previously also      
served as a director of various manufacturing, service, and financial           
organizations.                                                                  

JAMES E. OUSLEY, 50, has been employed by the Control Data Corporation  
since 1968 in a number of positions, including Chief Executive Officer and      
President of Control Data Systems, Inc., from 1992 to the present, President,   
Computer Products Group from 1989 to 1991, Vice President - Marketing and Sales,
Computer Products Group in 1989, Vice President - World Wide Sales and Services,
Imprimus Technology Incorporated from 1988 to 1989, and Vice President - Sales  
and Strategies Alliance, Data Storage Products Group from 1987 to 1988.  Mr.    
Ousley is currently a director of Control Data Systems, Inc., and Metaphase     
Technology, Inc.                                                                

CATHERINE Y. SELLECK, 62, has been an independent consultant to the     
computer industry since January 1994.  From January 1992 through January 1994,  
Ms. Selleck was the President and Chief Executive Officer of Metaphor, Inc.  Ms.
Selleck is currently a director of Right Management Consultants, Inc.           
Previously, Ms. Selleck held several executive positions with IBM Corporation,  
including Corporate Director of Office and Decision Support Systems from 1989 to
1991, Vice President, Field Operations, National Distribution Divisions from    
1986 to 1988, and Vice President, Information Systems and Administration,       
National Distribution Division from 1984 to 1985.                               

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MANAGEMENT BOARD                                                                

The following information is furnished with respect to each incumbent   
member of the Management Board.  All executive authority to make policy         
decisions emanates from the Management Board.                                   

DAVID J. FAULKNER, 57, is the Managing Director and the Chief Financial 
Officer of the Company.  He is also the Chief Financial Officer of Memorex Telex
Corporation and the Vice Chairman of its Board of Directors.  Mr. Faulkner has  
served as Chief Financial Officer of the Company since October 1989.  Prior to  
his employment with the Company, Mr. Faulkner was a Senior Partner with Arthur  
Young & Co.  Mr. Faulkner is a citizen of the United States.                    

ABN Trustcompany (Nederland) B.V. ("ABN") also serves as a member of the
Management Board.  Under a management agreement, ABN performs certain           
administrative functions for the Company.  The management agreement provides for
the payment by the Company of an annual management fee of DFL. 10,000, an annual
administration fee of     DFL. 2,000, and the out-of-pocket expenses incurred by
ABN in the performance of its duties.  The management agreement may be          
terminated by either party upon 30-day notice given prior to each anniversary   
date.  In addition, ABN may resign as a member of the Management Board at any   
time by giving two months notice to the other members of the Management Board.  

Hon. Peter H. Dailey resigned from the Supervisory Board as of March 31,
1996 to become the Company's Chief Executive Officer.  The Supervisory Board of 
the Company intends to nominate Mr. Dailey for election to the Management Board 
of the Company at the annual general meeting of stockholders of the Company to  
be held no later than September 30, 1996.                                       

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ITEM 11.  EXECUTIVE COMPENSATION                                                

   The following table provides information about the compensation for Messrs.
Gumucio, Faulkner, Morin, (the "Named Executive Officers").                     

      SUMMARY COMPENSATION TABLE

                                                        [Enlarge/Download Table]


                                                                                   LONG TERM                 
                                               ANNUAL COMPENSATION (2)            COMPENSATION               
                                      -----------------------------------------  --------------              
                                                                                     AWARDS                  
                                                                       OTHER     --------------        ALL   
                                                                       ANNUAL      SECURITIES         OTHER  
                                                                       COMPEN-     UNDERLYING         COMPEN-
                                                                       SATION       OPTIONS/          SATION 
   NAME AND PRINCIPAL POSITION  YEAR     SALARY         BONUS            (3)          SARS              (5)  
   ---------------------------  ----     ------         -----       ------------ --------------      --------
                                                                                                             
Marcelo A. Gumucio              1996  $  800,000    $   412,500    $   186,307              0       $   1,585
  Chairman, President and       1995     800,000        420,000        441,800        875,000  (4)      1,480
  Chief Executive Officer (1)   1994     900,000      1,000,000                                           600

David Faulkner                  1996     400,000        226,125         16,125              0           9,500
  Vice Chairman and Chief       1995     400,000        120,000        370,000        150,000  (4)      2,225
  Financial Officer             1994     500,000        500,000                                           600

Rudolph G. Morin                1996     305,760        155,387              0              0          11,307
  Senior Vice-President (6)     1995     315,000         75,000        292,633         50,000  (4)      1,745


------------------------------                                                  
(1) Mr. Gumucio resigned from  the Company in  March 1996.                      
(2) Compensation information  is provided for fiscal 1996, 1995, and 1994.      
(3) The amounts listed, for 1995,  include discretionary relocation allowances  
$387,000 for Mr. Gumucio, $370,000 for Mr. Faulkner and $292,633 for Mr.
Morin.. The amounts listed for 1996 include discretionary relocating    
  allowances of $132,461 for  Mr. Gumucio and $16,125 for Mr. Faulkner.  Mr.
Gumucio also received $53,846 in vacation allowance.                    
(4) The numbers listed are for employee stock options granted during fiscal     
1995.  As of March 31, 1995, no options have  been exercised.           
(5) The amounts listed are contributions paid by the Company to their 401(k)    
plan for the benefit of each of Messrs. Gumucio, Faulkner, and Morin.   
(6) Mr. Morin resigned from  the Company in  March 1996.                        

EMPLOYMENT CONTRACTS                                                            

  The Company has entered into employment agreements with Messrs. Dailey and
Faulkner.  The following is a summary of the principal terms of these           
agreements.                                                                     

The term of Mr. Dailey's employment agreement as the Chief Executive    
Officer of the Company commenced on April 1, and will continue until March 31,  
1997.  This initial term will be automatically renewed for successive one year  
periods unless either party provides the other with three (3) months notice of  
termination.  Mr. Dailey is entitled to an annual base salary of $500,000 and an
annual incentive bonus of up to 100% of his base salary, based upon performance 
goals.  The employment agreement provides for the grant of options to purchase  
250,000 shares of the Company's common stock in accordance with the terms of the
Company's Amended and Restated Stock Option Plan for Management.  The employment
agreement also provides for the participation in all employee incentive and     
benefit programs of the Company including the Company's pension plan, and       
certain perquisites.  Upon any                                                  

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termination of Mr. Dailey's employment by the Company without cause, he will be 
entitled to continued payments of his then-current annual base salary for the   
current term of employment.                                                     

The current employment agreement for Mr. Faulkner provides for his      
employment as Vice Chairman, Chief Financial Officer, and Managing Director of  
the Company.  Mr. Faulkner receives an annual base salary of $400,000 and       
participates in the Company's management incentive plan, stock option plan, and 
U.S. employee benefits program.  The employment agreement provides for a        
guaranteed incentive plan payment of $180,000 for the fiscal year ending March  
31, 1997.  Mr. Faulkner's employment may be terminated by either party upon     
60-day notice. Upon any termination of Mr. Faulkner's employment by the Company 
without cause he will be entitled to a severance payment equal to his then      
current annual base salary. The employment agreement further provides for a two 
year severance payment if he is terminated without cause within twelve months of
a change in control or a fundamental securities transaction.  Upon any          
termination by the Company without cause, Mr. Faulkner in entitled to certain   
healthcare  benefits, outplacement assistance of up to $25,000, and relocation  
assistance.  "Change in control" is defined to include (i) any person or group, 
other than current shareholders or debtholders, becoming the beneficial owner of
at least 35% of the Company's voting stock, if Mr. Faulkner is terminated within
60 days thereafter, or 50% of the Company's voting stock, (ii) any adoption of a
liquidation plan by the Company, and (iii) any disposition of the business of   
the Company by sale, merger, consolidation, or other transaction.  Fundamental  
Securities Transaction is defined to mean the purchase or agreement to purchase 
by any person or group any securities, whether convertible to common stock or   
not, which carries with it the right of the purchasing person or group to       
purchase 35% or more of the Company's voting capital securities at any time.    

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PENSION PLANS                                                                   

   The Company does not maintain a unified pension plan for its employees, but
rather maintains separate pension plans in most of the countries in which the   
Company or its subsidiaries operate.                                            

The pension plan for the United States is the Memorex Telex Employees'  
Pension Plan (the "Pension Plan").  The following table shows the estimated     
annual benefits payable upon retirement, assuming the final average compensation
and years of service indicated.                                                 

      PENSION PLAN TABLE

Remuneration                              Years of Service                      
------------                 -----------------------------------------------    
                        15        20        25        30        35
                         -------   -------   -------   -------   -------

$125,000                     $26,302   $35,069   $43,836   $52,603   $61,370    
$150,000 and above           $31,927   $42,569   $53,211   $63,853   $74,495    

   Benefits are calculated based on the following formula: 1% of Final Average
Compensation times Years of Service (maximum 35 years), plus 0.5% of Final      
Average Compensation in excess of Social Security Covered Compensation times    
Years of Service (maximum 35 years).  The foregoing table takes into account the
earnings limit of $150,000 for qualified defined benefit pension plans imposed  
by Section 401(a)(17) of the Internal Revenue Code of 1986, as amended, which   
provision became effective on January 1, 1994.  Benefits shown in the table are 
not subject to reduction for social security benefits or other offsetting       
amounts.  Benefits under the Pension Plan vest after five years of service.     
Covered compensation includes salaries and bonus awards from participation in   
the Company's management  bonus plan up to the maximum recognizable compensation
permitted for qualified pension plans.  On October 31, 1994 benefit accrual in  
the pension plan was suspended.  The foregoing table reflects the years of      
service, Final Average Compensation, and Covered Compensation as of October 31, 
1994.                                                                           

Mr. Faulkner is a participant in the Pension Plan.  Mr. Faulkner is also
entitled to supplemental retirement benefits.  The estimated annual benefits    
payable to Mr. Faulkner under the Pension Plan upon retirement at age 65 are    
$8,944, and under his supplemental retirement benefit agreement at age 60 are   
$24,013.                                                                        

      STOCK OPTIONS/SAR GRANTS IN LAST FISCAL YEAR

   There were no new stock option grants for the period ending March 31, 1996.

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ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT        

     The following table sets forth information as of May 31, 1996, with respect
to the beneficial ownership of shares of the Common Stock by all persons        
believed by the Company to be the beneficial owner of more than 5% of the       
outstanding shares of the Common Stock, by the Named Executive Officers, by     
members of the Management Board and Supervisory Board, and by all Named         
Executive Officers, all members of the Management Board and Supervisory Board   
and the nominee for the Supervisory Board as a group.  The information set forth
below is based upon the Company's records, and information obtained by the      
Company from the persons named below:                                           

                                              NUMBER OF SHARES        PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER         BENEFICIALLY OWNED       CLASS (1) 
------------------------------------        --------------------     -----------

Apollo Investment Fund. L.P.                                                    
c/o CIBC Bank and Trust Company                                             
(Cayman) Limited                                                      
Edward Street                                                               
Georgetown,  Grand Cayman                                                   
Cayman Islands                                                              
British West Indies                                                         

-and-                                                   

Lion Advisors, L.P.                                                             
Two Manhattanville Road                                                     
  Purchase, New York  10577                             4,255,279 (2)     14.38%

Carl C. Icahn                                                                   
100 South Bedford Road                                                      
  Mount Kisco, New York  10549                          2,201,248 (3)      7.44%

Hon. Peter H. Dailey                                      250,000 (4)         * 

David J. Faulkner                                         150,000 (5)         * 

All Named Executive Officers, members of the                                    
Management Board and Supervisory Board and                                      
nominee for the Supervisory Board, as a group                                   
(12 persons)                                            1,075,000 (6)      3.63%

*    Less than 1%.                                                              

(1)  Based upon the aggregate number of shares of Common Stock outstanding and  
the number of shares of Common Stock issuable upon exercise of stock  
   subscription warrants (the "$2.00 Warrants") to purchase shares of Common
Stock at $2 per share, issuable upon exercise of                      

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   stock subscription warrants (the "$14.00 Warrants") to purchase shares of
    Common Stock at $14 per share, and issuable upon exercise of stock options
granted under the Company's Stock Option Plan.                        

(2)  Includes (i) 3,465,847 shares of Common Stock, (ii) 512,148 shares of      
  Common Stock issuable upon exercise of $2.00 Warrants, and (iii) 277,284
   shares of Common Stock issuable upon exercise of $14.00 Warrants.  Apollo
     Investment beneficially owns 904,738 shares of Common Stock, $2.00 Warrants
representing the right to purchase 134,840 shares of Common Stock, and
    $14.00 Warrants representing the right to purchase 59,479 shares of Common
Stock.  AIF beneficially owns 601,219 shares of Common Stock and $2.00
    Warrants representing the right to purchase 89,604 shares of Common Stock.
  The managing general partner of both Apollo Investment and AIF is Apollo
    Advisors, and the administrative general partner of both Apollo Investment
     and AIF is Apollo Fund Administration Limited.  Lion Advisors, beneficially
   owns, for the benefit of certain investment accounts, 1,959,890 shares of
    Common Stock and $2.00 Warrants representing the right to purchase 287,704
shares of Common Stock. and $14.00 Warrants representing the right to 
     purchase 217,805 shares of Common Stock.  Lion Advisors has sole voting and
dispositive power with respect to such investment accounts.           

(3)  Includes (i) 2,065,541 shares of Common Stock, and (ii) 135,707 shares of  
  Common Stock issuable upon exercise of $14.00 Warrants.   Tortoise Corp.
("Tortoise") beneficially owns 2,187,075 shares of Common Stock, and  
 Chelonian Corp. ("Chelonian") beneficially owns 14,173 shares of Common
     Stock (including in each case shares of Common Stock issuable upon exercise
of $14.00 Warrants).   Tortoise is a wholly-owned subsidiaries of     
  Chelonian.  Chelonian is a wholly-owned indirect subsidiary of Highcrest
Investors Corp., which is approximately 99.5% owned by Icahn Holding  
   Corporation.  Mr. Icahn is the sole stockholder of Icahn Holding Company.

(4)  Includes 250,000 shares of Common Stock issuable upon exercise of stock    
options granted under the Company's Stock Option Plan.                

(5)  Includes 150,000 shares of Common Stock issuable upon exercise of stock    
options granted under the Company's Stock Option Plan.                

(6)  Includes 1,075,000 shares of Common Stock issuable upon exercise of stock  
  options granted under the Company's Stock Option Plan.  Does not include
   4,255,242 shares of Common Stock beneficially owned by Apollo Investment,
     AIF, and Lion Advisors, with which Messrs. Gross and Harris are associated.
See "Supervisory Board - Incumbent Members of the Supervisory Board." 
 Messrs. Gross and Harris disclaim beneficial ownership of the shares of
Common Stock owned beneficially by Apollo Investment, AIF, and Lion   
Advisors.                                                             

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                        

None                                                                  

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 PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K       

(a)   INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES           

1.   Consolidated Financial Statements:                                         
Report of Ernst & Young LLP,  Independent Auditors          
Consolidated Balance Sheets at March 31, 1996 and 1995      
Years ended March 31, 1996, 1995 and 1994:                  
Consolidated Statements of Operations             
Consolidated Statements of Cash Flows             
        Consolidated Statements of Changes in Stockholders' Equity
(Deficit)                                         

Notes to Consolidated Financial Statements                  

2.   Consolidated Financial Statement Schedule, years ended March 31, 1996, 1995
and 1994:                                                             

Schedule II               Valuation and Qualifying Accounts 

All other schedules have been omitted because the information is not  
applicable or is not material or has been included in the Consolidated Financial
Statements or the notes thereto.                                                

(b)   REPORTS ON FORM 8-K                                                       

On April 4, 1996, the registrant filed a current report on Form 8-K   
reporting the resignation of Marcelo Gumucio, on March 19, 1996, as Chief       
Executive Officer and as a Member of the Management Board of the Company.       
Effective March 31, 1996, Peter H. Dailey, who had previously been Chairman of  
the Company's Supervisory Board, became its Chief Executive Officer.            

Additionally, effective March 22, 1996, Memorex Telex Corporation, a  
subsidiary of the Company, entered into a Credit and Guaranty Agreement with    
Foothill Capital Corporation pursuant to which it borrowed $12 million through a
two-year term loan facility to be used for the purchase of additional inventory.

    In connection with the Foothill Agreement, the Company sought and received
from its existing lenders a modification of the existing credit facility        
deferring interest payments accruing prior to March 31, 1996, and scheduled     
principal payments until maturity of the Foothill Agreement.  In consideration  
for the modification, the Company agreed to additional covenants which include  
additional reporting and financial conditions and an increase in the effective  
interest rate of 1%.                                                            

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(c)   EXHIBITS                                                                  
2.1*         Disclosure Statement dated January 6, 1994.                        
2.2*         Joint Plan of Reorganization confirmed by the United States        
          Bankruptcy Court for the District of Delaware on March 14, 1994,
and effective on March 24, 1994.                      
3.1**        English translation of Restated Articles of Association of Memorex 
Telex N.V.                                            
4.1*         Specimen Certificate for common stock, DFL. 0.10 nominal value per 
share, of the Company.                                
4.2*         Form of $2.00 Warrant.                                             
4.3*         Form of $14.00 Warrant.                                            
10.11*       Management Agreement dated as of October 23, 1986, between ABN     
Trust Company and Memorex Telex N.V.                  
10.12*       Technology Transfer Agreement dated as of May 11, 1990 between     
        Memorex Telex Corporation and American Telephone and Telegraph
Company (the "AT&T Agreement").                       
10.13**      Settlement Agreement and Stipulation dated as of February 5, 1992, 
          between Memorex Telex Corporation, Memorex Corporation and Tulsa
Computer Products, Ltd. and the Department of Justice.
10.14***     Amending Agreement dated February 3, 1994 to the AT&T Agreement.   
10.15***     Restructured Credit and Guaranty Agreement dated as of March 24,   
         1993 among certain subsidiaries of the Company as Borrowers and
          Guarantors, the Company as Guarantor, the Lenders listed therein
 and Morgan Guaranty Trust Company of New York as Agent.
10.15(a)**** Amendment No. 1 to the Restructured Credit and Guaranty Agreement. 
10.15(b)**** Amendment No. 2 to and Waiver under the Restructured Credit and    
Guaranty Agreement.                                   
10.15(c)     Amendment and Waiver No. 3 under Restructured Credit and Guaranty  
Agreement.                                            
10.15(d)     Amendment No. 4 to Restructured Credit and Guaranty Agreement.     
10.15(e)     Amendment No. 5 to Restructured Credit and Guaranty Agreement.     
10.15(f)     Amendment No. 6 to Restructured Credit and Guaranty Agreement.     
10.21**      Employment Agreement dated as of November 4, 1992, between the     
Company and Marcelo A. Gumucio.                       
_____________________________________                                           
*       Previously filed as an Exhibit to the Company's Registration  
            Statement on Form S-4 (Registration No. 33-67988) and incorporated
herein by reference.                                  

  **      Previously filed as an Exhibit to the Company's Annual Report on
             Form 10-K for the Fiscal Year Ended March 31, 1993 and incorporated
herein by reference.                                  

  ***     Previously filed as an Exhibit to the Company's Annual Report on
             Form 10-K for the Fiscal Year Ended March 31, 1994 and incorporated
herein by reference.                                  

  ****    Previously filed as an Exhibit to the Company's Annual Report on
             Form 10-K for the Fiscal Year Ended March 31, 1995 and incorporated
herein by reference.                                  

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10.21(a)**** Amendment No. 1 effective as of April 1, 1995 to the Employment    
        Agreement made as of November 4, 1992, between the Company and
Marcelo A. Gumucio.                                   
10.22***     Employment Agreement dated as of June 29, 1993, between the Company
and Rudolph G. Morin.                                 
10.23***     Employment Agreement dated as of April 1, 1994, between the Company
and David J. Faulkner.                                
10.23(a)***  Amended and Restated Employment Agreement effective as of April 1, 
1995, between the Company and David J. Faulkner.      
10.23(b)     Employment Agreement dated as of April 1, 1996, between the Company
and Peter H. Dailey.                                  
10.24        Credit and Guaranty Agreement dated as of March 5, 1996 among      
          certain subsidiaries of the Company as borrowers and guarantors,
    the Company as guarantor and Foothill Capital Corporation.
23.1         Consent of Ernst & Young LLP, Independent Auditors                 
27           Financial Data Schedule                                            
-------------------------------------                                           
  ***     Previously filed as an Exhibit to the Company's Annual Report on
             Form 10-K for the Fiscal Year Ended March 31, 1994 and incorporated
herein by reference.                                  

  ****    Previously filed as an Exhibit to the Company's Annual Report on
             Form 10-K for the Fiscal Year Ended March 31, 1995 and incorporated
herein by reference.                                  

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 REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

The Supervisory Board                                                           
Memorex Telex N.V.                                                              

 We have audited the accompanying consolidated balance sheets of Memorex
Telex N.V. and subsidiaries (the "Company") as of March 31, 1996 and 1995, and  
the related consolidated statements of operations, changes in stockholders'     
equity (deficit), and cash flows for each of the three years in the period ended
March 31, 1996. Our audits also included the financial statement schedule listed
in the index at Item 14(a).  These financial statements and schedule are the    
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements and schedule based on our audits.         

We conducted our audits in accordance with generally accepted auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and schedule are    
free of material misstatement.  An audit includes examining, on a test basis,   
evidence supporting the amounts and disclosures in the financial statements and 
schedule.  An audit also includes assessing the accounting principles used and  
significant estimates made by management, as well as evaluating the overall     
financial statement presentation.  We believe that our audits provide a         
reasonable basis for our opinion.                                               

 In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Memorex Telex N.V. and subsidiaries at March 31, 1996 and 1995, and the         
consolidated results of their operations and their cash flows for each of the   
three years in the period ended March 31, 1996, in conformity with generally    
accepted accounting principles.  Also, in our opinion, the related financial    
statement schedule, when considered in relation to the basic financial          
statements taken as a whole, presents fairly in all material respects the       
information set forth therein.                                                  

The accompanying consolidated financial statements have been prepared 
assuming that Memorex Telex N.V. will continue as a going concern which         
contemplates realization of assets and the liquidation of liabilities in the    
ordinary course of business.  During the 1996 fiscal year, the Company incurred 
significant negative operating cash flow and as of March 31, 1996, has a        
significant working capital deficiency which includes significant debt repayment
obligations during fiscal year 1997.  These conditions raise substantial doubt  
about the Company's ability to continue as a going concern.  Memorex Telex N.V. 
plans to deal with these issues as described in Note 1, Financial Condition and 
Future Financial Plans. The financial statements do not include any adjustments 
of assets or the amounts and classification of liabilities that may result from 
the outcome of this uncertainty.                                                

                                                               ERNST & YOUNG LLP

Dallas, Texas                                                                   
June 28, 1996                                                                   

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MEMOREX TELEX N.V.
 (A Netherlands Corporation)
 CONSOLIDATED BALANCE SHEETS
(In thousands, except for share amounts)

                                                    MAR. 31, 1996  MAR. 31, 1995
                                                    -------------  -------------
ASSETS

Current Assets:                                                                 
Cash and cash equivalents including restricted                              
deposits and guarantees of $7,592 and $14,669                           
  at March 31, 1996 and 1995, respectively         $   26,838     $   36,886
Accounts receivable, less allowance for doubtful                            
accounts of $10,161 and $12,357 at                                      
  March 31, 1996 and 1995, respectively               108,021        113,213
Inventories, primarily finished goods                  34,891         30,730
Service parts                                          31,697         35,765
Other current assets                                    4,104          3,756
                                                    ---------      ---------
Total current assets                                    205,551        220,350  

Property, plant and equipment, net                       28,622         33,866  
Reorganization value in excess of amounts                                       
 allocable to identifiable assets, net                      0        250,245
Other assets                                             33,995         32,005  
                                                    ---------      ---------
                                                   $  268,168     $  536,466
                                                    ---------      ---------
                                                    ---------      ---------
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Current Liabilities:                                                            
Current debt obligations                          $   114,578      $  15,960
Accounts payable                                      119,197        119,997
Accrued liabilities                                   169,098        183,262
                                                    ---------      ---------
Total current liabilities                               402,873        319,219  

Debt obligations                                          4,903         71,475  
Other long-term liabilities                             137,743        176,599  
Stockholders' Deficit:                                                          
Common stock, 124,996,000 shares each with a                                
nominal value of ten Dutch cents (DFL 0.10)                           
authorized; 25,076,665 and 25,053,296 shares                          
issued and outstanding in 1996 and 1995,                              
   respectively                                         1,338          1,336
Additional paid-in capital                             73,726         73,702
 Accumulated deficit                                  (354,749)      (108,011)
Foreign currency translation adjustment                 2,334          2,146
                                                    ---------      ---------
Total stockholders' deficit                            (277,351)       (30,827) 
                                                    ---------      ---------
                                                   $  268,168     $  536,466
                                                    ---------      ---------
                                                    ---------      ---------

 See accompanying notes.

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MEMOREX TELEX N.V.
 (A Netherlands Corporation)
 CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except for share amounts)

                                                        [Enlarge/Download Table]

                                                                                  PREDECESSOR  
                                                        REORGANIZED COMPANY         COMPANY    
                                                    ----------------------------  -----------  
                                                               Year Ended March 31,            
                                                    -----------------------------------------  
                                                        1996           1995     |      1994    
                                                    -----------    -----------  |  ----------- 
                                                                                |              
Revenues                                            $   834,053    $   909,751  |  $ 1,015,574 
Cost of revenues                                        631,593        651,027  |      705,660 
                                                    -----------    -----------  |  ----------- 
  Gross margin                                          202,460        258,724  |      309,914 
Selling, general, and administrative expenses           189,982        225,676  |      258,400 
Curtailment gain on benefit plan                              0         (9,744) |            0 
Amortization of intangibles                             224,456        125,122  |       23,459 
Other (income) expenses, net                             (4,503)         2,530  |       (4,192)
                                                    -----------    -----------  |  ----------- 
  Operating income (loss)                              (207,475)       (84,860) |       32,247 
Interest income                                           1,281          1,083  |        3,344 
Interest expense                                        (19,844)       (20,127) |     (100,433)
Accretion of debt forgiveness discount                  (20,700)             0  |      (20,455)
                                                    -----------    -----------  |  ----------- 
  Loss before reorganization items and                                          |              
     income taxes                                      (246,738)      (103,904) |      (85,297)
Reorganization items:                                                           |              
   Fair value adjustments                                     0              0  |     (342,712)
   Loss on restructuring of operations                        0              0  |      (51,558)
   Reorganization related professional fees                   0              0  |      (12,266)
                                                    -----------    -----------  |  ----------- 
  Loss before income taxes                             (246,738)      (103,904) |     (491,833)
Provision for income taxes                                    0         (4,107) |      (10,158)
                                                    -----------    -----------  |  ----------- 
  Loss before extraordinary items                      (246,738)      (108,011) |     (501,991)
Extraordinary item, gain on extinguishment of debt            0              0  |      728,996 
                                                    -----------    -----------  |  ----------- 
  Net income (loss)                                 $  (246,738)   $  (108,011) |  $   227,005 
                                                    -----------    -----------  |  ----------- 
                                                    -----------    -----------  |  ----------- 
Net loss per common share                           $     (9.84)   $     (4.32) |         *    
Weighted average common shares outstanding           25,068,626     25,014,724  |         *    

 See accompanying notes.

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MEMOREX TELEX N.V.
 (A Netherlands Corporation)
 CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

                                                        [Enlarge/Download Table]

                                                                                    PREDECESSOR  
                                                          REORGANIZED COMPANY         COMPANY    
                                                      ----------------------------  -----------  
                                                                 Year Ended March 31,            
                                                      -----------------------------------------  
                                                          1996           1995     |      1994    
                                                      -----------    -----------  |  ----------- 
                                                                                  |              
Cash flows from operating activities:                                             |              
     Loss before extraordinary item                   $  (246,738)   $  (108,011) |  $  (501,991)
                                                                                  |              
Adjustments to reconcile loss before extraordinary                                |              
   item to net cash provided (used) by operating                                  |              
   activities:                                                                    |              
     Depreciation and amortization                        235,032        135,171  |       38,359 
     Gain from asset sales                                 (6,549)             0  |            0 
     Curtailment gain on benefit plan                           0         (9,744) |            0 
     Accretion of debt forgiveness discount                20,700              0  |       20,455 
     Realignment and reorganization charges                     0              0  |      397,520 
     Interest on 10% Senior Guaranteed Notes,                                     |              
        paid in additional notes                                0              0  |       28,176 
     Changes in components of working capital                                     |              
        excluding short-term debt                           1,265         (7,761) |      (11,114)
     Other long-term liabilities                          (36,929)         8,055  |      (20,900)
     Other assets                                           2,790           (700) |       18,495 
     Other                                                      6             (1) |       (2,634)
                                                      -----------    -----------  |  ----------- 
Net cash provided (used) by operating activities          (30,423)        17,009  |      (33,634)
                                                                                  |              
Cash flows from investing activities:                                             |              
     Proceeds from asset sales                             13,924         14,173  |       35,238 
     Capital expenditures                                  (4,921)        (9,309) |       (6,220)
                                                      -----------    -----------  |  ----------- 
Net cash provided (used) by investment activities           9,003          4,864  |       29,018 
                                                                                  |              
Cash flows from financing activities:                                             |              
     Issuance of common stock                                  26             38  |            0 
     Issuance of debt                                      26,322         37,676  |       23,355 
     Redemption of debt                                   (14,976)       (48,028) |      (37,054)
                                                      -----------    -----------  |  ----------- 
Net cash provided (used) by financing activities           11,372        (10,314) |      (13,699)
                                                      -----------    -----------  |  ----------- 
                                                                                  |              
Net increase (decrease) in cash and cash equivalents      (10,048)        11,559  |      (18,315)
                                                                                  |              
Cash and cash equivalents at beginning of year             36,886         25,327  |       43,642 
                                                      -----------    -----------  |  ----------- 
Cash and cash equivalents at end of year              $    26,838    $    36,886  |  $    25,327 
                                                      -----------    -----------  |  ----------- 
                                                      -----------    -----------  |  ----------- 

 See accompanying notes.

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MEMOREX TELEX N.V.
 (A Netherlands Corporation)
CONSOLIDATED  STATEMENT OF CHANGES
 IN STOCKHOLDERS' EQUITY (DEFICIT)
(In thousands)

                                                        [Enlarge/Download Table]

                                                                       Foreign        Total     
                                            Additional    Accum-       Currency    Stockholders'
                                 Common      Paid-in      ulated      Translation     Equity    
                                  Stock      Capital      Deficit     Adjustment     (Deficit)  
                                  -----      -------      -------     ----------     ---------  
                                                                                                
PREDECESSOR COMPANY:                                                                            
--------------------                                                                            
Balances at March 31, 1993     $    5,455   $  169,667   $ (395,822)  $   (3,270)    $ (223,970)
Net income                              0            0      227,005            0        227,005 
Foreign currency                                                                                
   translation adjustment               0            0            0       (3,035)        (3,035)
Issuance of stock and                                                                           
   application of fresh start                                                                   
   reporting                       (4,122)     (96,000)     168,817        6,305         75,000 
                               ----------   ----------   ----------   ----------     ---------- 
REORGANIZED COMPANY:                                                                            
--------------------                                                                            
Balances at March 31, 1994          1,333       73,667            0            0         75,000 
Issuance of common stock                3           35            0            0             38 
Net loss                                0            0     (108,011)           0       (108,011)
Foreign currency                                                                                
   translation adjustment               0            0            0        2,146          2,146 
                               ----------   ----------   ----------   ----------     ---------- 
Balances at March 31, 1995          1,336       73,702     (108,011)       2,146        (30,827)
Issuance of common stock                2           24            0            0             26 
Net loss                                0            0     (246,738)           0       (246,738)
Foreign currency                                                                                
   translation adjustment               0            0            0          188            188 
                               ----------   ----------   ----------   ----------     ---------- 
Balances at March 31, 1996     $    1,338   $   73,726   $ (354,749)  $    2,334     $ (277,351)
                               ----------   ----------   ----------   ----------     ---------- 
                               ----------   ----------   ----------   ----------     ---------- 

 See accompanying notes.

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      MEMOREX TELEX N.V.
     (A Netherlands Corporation)
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
      (In thousands, except share and per share amounts)

1. FINANCIAL CONDITION AND FUTURE FINANCIAL PLANS                               

The Company is continuing a comprehensive transformation from a         
manufacturing to a provider of information technology solutions including the   
distribution and integration of data network and storage products and the       
provision of related services. The Company's revenues and gross margins         
experienced declines of 8.3% and 21.7%, respectively, in fiscal year 1996 as    
a result of insufficient working capital to accomplish the necessary            
transformation, thereby causing a level of business activity lower than         
planned. These declines have not been sufficiently offset by corresponding      
declines in the operating costs of the Company.                                 

  Management's plans to deal with these working capital and operating issues
include the following: 1) Complete the sale of the stock of its operations in   
Australia, Hong Kong, Singapore, and Taiwan (collectively referred to herein as 
"Asia/Pacific Operations"), See Note 7 for further discussion, 2) Finalize the  
agreements in principal with the Credit Facility and Term Loan lenders to cure  
defaults that exist under these facilities, 3) Obtain additional financing from 
financial and strategic investors, 4) Continue the transition of the Company as 
specified in its business plan discussed below, and 5) Sell other operations as 
necessary. There can be no assurance as to whether management's plans will be   
successful or what other actions might become necessary.                        

The Company's business plan is to continue to transform from a developer
and manufacturer of computer hardware to a provider of networking and storage   
solutions.  As part of this transformation, the Company continues to re-engineer
its selling, service, product development, fulfillment, and finance and         
administrative processes. A summary table of remaining reorganization and       
realignment cost reserves is presented in Note 11. These initiatives should     
continue to lower costs and are aimed at improving operating cash flow but will 
require additional funding in order to implement all of the initiatives.        

  The financial statements have been prepared assuming that the Company will
continue as a going concern which contemplates the realization of assets and the
liquidation of liabilities in the normal course of business.  However, if it is 
necessary for the Company to attempt to sell additional operations in order to  
accomplish management's plans and satisfy its various cash obligations, no      
assurance can be given that the Company will be able to sell  additional        
operations or if such sales occur the Company will not incur substantial        
additional losses or incur additional liabilities from such disposition program.

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      MEMOREX TELEX N.V.
     (A Netherlands Corporation)
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
      (In thousands, except share and per share amounts)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                                   

BASIS OF PRESENTATION                                                           

   The consolidated financial statements have been prepared in accordance with
United States generally accepted accounting principles and are presented in     
United States dollars.  The consolidated financial statements include the       
accounts of the Company and its majority owned subsidiaries.  All intercompany  
balances and transactions have been eliminated.  Certain reclassifications were 
made to the prior years' balances to conform to the current year's presentation.

REORGANIZATION PLAN                                                             

 Based on a solicitation of votes completed February 9, 1994, the  Company
received support from the impaired debt and equity holders for a voluntary plan 
of reorganization under chapter 11 of the United States Bankruptcy Code.  On    
March 24, 1994 the Company's prepackaged plan of reorganization (the            
"Reorganization Plan") was confirmed and became effective.  The Reorganization  
Plan was accounted for pursuant to Statement of Position 90-7 ("SOP 90-7") of   
the American Institute of Certified Public Accountants, entitled "Financial     
Reporting by Entities in Reorganization Under the Bankruptcy Code".  The        
accompanying consolidated financial statements reflect the use of "fresh start" 
reporting as required by SOP 90-7, in which assets and liabilities were adjusted
to their fair values and resulted in the creation of a new reporting entity (the
"Company" or the "Reorganized Company") with no retained earnings or accumulated
deficit as of March 31, 1994.  Accordingly, the consolidated financial          
statements for the periods prior to March 31, 1994 (the "Predecessor Company")  
are not comparable to consolidated financial statements presented on or         
subsequent to March 31, 1994. A black line has been drawn on the accompanying   
consolidated financial statements and notes thereto to distinguish between the  
Company and the Predecessor Company balances.                                   

The Reorganization Plan provided for the exchange of the Predecessor    
Company's debt and accrued interest for a substantially reduced amount of new   
debt, all of the new common stock of the Company, and certain warrants to       
purchase new common stock of the Company.   The stockholders of the Predecessor 
Company received warrants to purchase new common stock of the Company.   See    
Note 10 for  additional information on the warrants exchanged.                  

   As a result of the debt restructuring and the application of  "fresh start"
accounting  as required by SOP 90-7, a gain on the extinguishment of debt of    
approximately $729.0 million and reorganization items of approximately $406.5   
million were recorded in the prior year.  See Note 11 for the detail of the     
expenses included in reorganization items for the year ended March 31, 1996.    

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      MEMOREX TELEX N.V.
     (A Netherlands Corporation)
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
      (In thousands, except share and per share amounts)

  The Stockholders' deficit of the Predecessor Company was eliminated in the
restructuring as follows:                                                       

Stockholders' deficit before restructuring             $   (322,460)    
Reorganization costs and fair value adjustments            (406,536)    
Gain on debt restructure                                    728,996     
                                                    ------------
Stockholders' deficit after restructuring              $          0     
                                                    ------------
                                                    ------------

USE OF ESTIMATES                                                                

The preparation of financial statements in conformity with generally    
accepted accounting principles requires management to make estimates and        
assumptions that affect the amounts reported in the financial statements and    
accompanying notes.  Actual results could differ from those estimates.          

ACCOUNTS RECEIVABLE                                                             

  The Company services a highly diversified customer base composed primarily
of Fortune 1000 corporations and  foreign equivalents, large government         
agencies, the financial community, and medical facilities, which mitigates      
exposure to concentrations of credit risk.  Trade receivables are generally due 
between 45-60 days and collateral is generally not required.  The Company       
performs periodic credit evaluations of its customers' financial condition.     

   Excluded from accounts receivables are United States trade receivables sold
under  an agreement with a financial institution to sell a portion of its United
States accounts receivable.  The maximum amount of receivables which can be sold
is $40.0 million.  At March 31, 1996 and 1995, the amount of United States      
receivables sold were $38.3 and $40.0 million, respectively, and are reflected  
as a reduction of accounts receivable in the Consolidated Balance Sheets.  The  
agreement can be terminated by either party on a monthly basis and, if          
terminated, the Company would be forced to obtain additional working capital    
financing.  While the Company believes such agreements with the financial       
institution will continue, there can be no assurances that such agreement will  
continue.                                                                       

INVENTORIES                                                                     

   Inventories are stated at the lower of cost (determined using the first-in,
first-out method) or market.  Inventories associated with discontinued products 
and lines of business are valued at estimated net realizable value as determined
using estimated selling prices less costs to dispose of the products.           

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      MEMOREX TELEX N.V.
     (A Netherlands Corporation)
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
      (In thousands, except share and per share amounts)

PROPERTY, PLANT AND EQUIPMENT                                                   

   Property, plant and equipment is recorded at cost and primarily consists of
buildings and improvements, equipment, and furniture and fixtures.  Depreciation
is computed using the straight-line method with lives ranging up to 30 years on 
buildings and improvements, four years on office equipment, and 10 years on     
equipment and furniture and fixtures.  Accumulated depreciation is $16.5 million
and $9.0 million at March 31, 1996 and 1995, respectively.                      

REORGANIZATION VALUE IN EXCESS OF AMOUNTS ALLOCABLE TO IDENTIFIABLE ASSETS      

  Reorganization value in excess of amounts allocable to identifiable assets
resulted from the application of  "fresh start" reporting, as discussed above,  
which requires the Predecessor Company's unidentified intangibles, net of       
amortization, to be reduced to zero and a new amount to be recorded equaling the
excess of the fair value of the Company over the fair value allocated to its    
identifiable assets.  This excess is classified as reorganization value in      
excess of amounts allocable to identifiable assets (the "Reorganization Value").
The reorganized value was originally determined to be  amortized over a three-  
year period.                                                                    

   In March 1996 it was determined that the remaining Reorganization Value was
not recoverable through future operations. This conclusion was based on a number
of factors including, but not limited to the continued decline in operating     
results compared to the Reorganization Plan from which the Reorganization Value 
was based and discussions with potential investors which provided an indication 
as to an enterprise value for the Company.  Accordingly, the residual           
Reorganization Value, net of adjustments including the allocation of $16 million
of the reorganization value to the Asia/Pacific operations and certain other    
restructuring reserve revaluations (see Note 11), of approximately $99.3 million
was included as a component of amortization of intangibles in the Consolidated  
Statement of Operations.                                                        

ACCOUNTS PAYABLE                                                                

 Included in accounts payable is approximately $17.6 million for the years
ended March 31, 1996 and 1995 which is due at various times up to September 1996
under an extended term agreement with a vendor which currently expires on March 
31, 1997.  The extended term agreement provides for outstanding product         
purchases up to $18.0 million and bears interest at market rates.  The payable  
is collateralized by the Company's investment in an affiliate accounted for     
under the equity method.  The Company has certain other informal agreements with
major vendors where interest accrues on overdue accounts payable.               

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      MEMOREX TELEX N.V.
     (A Netherlands Corporation)
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
      (In thousands, except share and per share amounts)

PRODUCT WARRANTY COSTS                                                          

The Company provides warranty on certain products for varying periods of
time up to three years and recognizes the estimated cost of warranty at the time
the sale is recorded.                                                           

FOREIGN CURRENCIES                                                              

Translation adjustments are recorded in the foreign currency translation
adjustment account included in stockholders' equity, and transaction gains or   
losses are included in the results of operations for the period as part of other
income and expenses (approximately $3.4 million of net exchange gain in 1996,   
approximately $5.5 million of net exchange loss in 1995, and approximately $4.7 
million of net exchange gain in 1994).                                          

REVENUE RECOGNITION                                                             

Revenue is recognized upon shipment or certification of acceptance      
depending on individual contract terms.  Service revenue is recognized ratably  
over the term of the service contract.                                          

CASH AND CASH EQUIVALENTS                                                       

Cash generally includes all highly liquid investments with a maturity of
three months or less, but also includes deposits principally used for guarantees
and sureties for casualty insurance, Company performance and customs.  The      
deposits and guarantees are restrictive and can extend for periods up to a year.

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      MEMOREX TELEX N.V.
     (A Netherlands Corporation)
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
      (In thousands, except share and per share amounts)

3. ASSET SALES                                                                  

The Company had assets sales during fiscal 1996 with total proceeds of  
$13.9 million, which consisted primarily of a portion of the common stock of an 
investment in an affiliate.                                                     

In fiscal 1995, the Company completed a series of transactions which    
disposed of land and buildings with total proceeds of $14.2 million.  These     
dispositions included two properties used for assembly and distribution located 
in Tulsa, Oklahoma and Raleigh, North Carolina, a manufacturing facility which  
was not in use located in Santa Clara, California, and office space located in  
Tulsa, Oklahoma and in the United Kingdom.                                      

  The gains resulting from these asset sales were approximately $6.5 million
and  $2.4 million and are included as other income within the Consolidated      
Statements of Operations for the respective years ended March 31, 1996 and 1995.

4. ACCRUED LIABILITIES                                                          

Accrued liabilities consist of the following at March 31:               

                                           1996           1995

Realignment and reorganization cost      $   16,400     $   25,000
Income taxes payable                         12,048         11,676
Deferred revenue                             54,450         57,300
Compensation and related benefits            32,016         33,068
Accrued interest                              6,897          2,438
Warranty reserves                            12,341         15,481
Royalty obligation                            3,353          5,085
Other                                        31,593         33,214
                                           ----------     ----------
                                         $  169,098     $  183,262
                                           ----------     ----------
                                           ----------     ----------

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      MEMOREX TELEX N.V.
     (A Netherlands Corporation)
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
      (In thousands, except share and per share amounts)

5. INCOME TAXES                                                                 

The Company has operations in various countries which have differing tax
laws and rates.  Consequently, the effective tax rate on consolidated income    
before income taxes may vary from year to year according to the sources of      
earnings by country.                                                            

Loss before income taxes consists of the following:                     

                            Year Ended March 31,
                            ----------------------------------------
                                1996          1995     |      1994
                                ----          ----     |      ----
                                             |
Domestic (Netherlands)            $   (8,500)    $  (56,764)  |  $  (70,673)    
Foreign                             (238,238)       (47,140)  |    (421,160)    
                              ---------      ---------   |   ---------
   Total                      $ (246,738)    $ (103,904)  |  $ (491,833)
                              ---------      ---------   |   ---------
                              ---------      ---------   |   ---------

The provision for income taxes consists of the following:               

                            Year Ended March 31,
                            ----------------------------------------
                                1996          1995    |       1994
                                ----          ----    |       ----
                                           |
Current                           $      297     $   (8,678) |   $  (10,409)    
Deferred                                (297)         4,571  |          251     
                              ---------      ---------  |    ---------
   Total                      $        0     $   (4,107) |   $  (10,158)
                              ---------      ---------  |    ---------
                              ---------      ---------  |    ---------

 There is no provision for income taxes for the year ended March 31, 1996,
due to the utilization of post March 31, 1994 net operating losses and          
adjustments to prior income tax accruals.                                       

  The current provisions for the years ended March 31, 1995 and 1994 include
additional provisions of $8,050 and $11,749, respectively, as a result of       
examinations and settlements with taxing authorities in the United States and   
other jurisdictions.  Total income taxes payable included in accrued liabilities
and other long-term liabilities were $73,040 and $75,100 at March 31, 1996 and  
1995, respectively.                                                             

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      MEMOREX TELEX N.V.
     (A Netherlands Corporation)
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
      (In thousands, except share and per share amounts)

  Deferred income taxes reflect the net tax effects of temporary differences
between the amounts of assets and liabilities for financial reporting purposes  
and the amounts used for income tax purposes.  Significant components of the    
Company's deferred tax liabilities and assets as of  March 31, 1996 and 1995 are
as follows:                                                                     

                                             1996           1995
                                             ----           ----
Deferred tax liabilities:                                                 
Sales type leases                             $   3,863      $   4,778  
Other                                               539            694  
                                             --------       --------
 Total deferred tax liabilities                 4,402          5,472
                                             --------       --------

Deferred tax assets:                                                      
Depreciation                                      3,594          5,661  
Deferred expenses                                50,892         52,455  
Reorganization costs                             11,593         30,206  
Other financial reserves                         19,875         21,467  
Other                                            12,758         13,940  
3/31/93 - 3/31/94 NOL carryforwards (U.S.)       39,956         39,956  
Post 3/31/94 net operating loss (U.S.)           39,168         26,851  
Net operating loss (non-U.S.)                    84,449         80,799  
                                             --------       --------
Total deferred tax assets                        262,285        271,335   
                                             --------       --------
Net deferred tax assets                          257,883        265,863   
Valuation allowance for deferred tax assets     (254,107)      (261,986)  
                                             --------       --------
Net deferred tax assets                        $   3,776      $   3,877   
                                             --------       --------
                                             --------       --------

The valuation allowance decreased approximately $8.0 million during the 
year due primarily to realization of tax assets relating to reorganization costs
offset by increases in net operating losses. Any tax benefits for items related 
to pre-reorganization periods will be credited to paid-in capital since         
reorganization value in excess of amounts allocable to identifiable assets was  
fully amortized in the current year.                                            

 Effective March 31, 1994, the Company completed its second reorganization
under a prepackaged plan which resulted in a change in the ownership of the     
Company.   Under provisions of the U.S. Internal Revenue Code, certain aspects  
of the reorganization under the prepackaged plan have substantially restricted  
the Company's ability to use the U.S. net operating loss carryforwards prior to 
the effective date.  At March 31, 1996, the Company had restricted U.S. net     
operating loss carryforwards of approximately $114.0 million which expire in the
years 2008 and 2009.  Additionally, the Company had unrestricted U.S. net       
operating loss carryforwards of approximately $112.0 million which expire in the
year 2010 and 2011.  At March 31, 1996, certain non-U.S. subsidiaries had net   
operating loss carryforwards of approximately $411 million which may be utilized
in future years.                                                                

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      MEMOREX TELEX N.V.
     (A Netherlands Corporation)
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
      (In thousands, except share and per share amounts)

  At March 31, 1996, foreign earnings of approximately $35 million have been
retained indefinitely by subsidiaries for reinvestment.  If repatriated, these  
earnings are exempt from Netherlands tax, but would incur other withholding     
taxes of approximately $.8 million.                                             

The difference between the consolidated effective tax rate and the      
statutory Netherlands Corporate tax rate of 35% is reconciled as follows:       

                                      Year Ended March 31,
                                      ----------------------------------------
                                      1996           1995    |      1994
                                      ----           ----    |      ----
                                                   |
Tax benefit at statutory rate         $   86,359     $   36,366  |   $  172,142 
Net operating losses and net deferred                            |              
tax assets for which no tax benefit                             |             
 has been recognized                     (18,434)        (2,757) |     (162,594)
Foreign taxes at different rates          11,160          7,208  |          254 
Reorganization value amortization        (79,085)       (36,874) |       (8,211)
Accrual for prior year taxes                   0         (8,050) |      (11,749)
                                      ---------      ---------  |    ---------
        Total                         $        0     $   (4,107) |   $  (10,158)
                                      ---------      ---------  |    ---------
                                      ---------      ---------  |    ---------

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      MEMOREX TELEX N.V.
     (A Netherlands Corporation)
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
      (In thousands, except share and per share amounts)

6. DEBT OBLIGATIONS                                                             

Debt obligations consist of the following at March 31:                  

                                                     1996           1995
                                                     ----           ----
Restructured Credit Facility, net of $20.7 million                              
 of discount at 1995                               $   97,500     $   76,800

Term Loan Credit and Guaranty Agreement                  12,000              0  

Obligations in respect of non-recourse debt                                     
  secured by lease assets                               1,208          2,309

Other debt                                                8,773          8,326  
                                                     --------       --------
                                                      119,481         87,435
Less current debt:                                                              
 Long-term debt classified as current                 109,500         14,281
 Local borrowings by subsidiaries                       5,078          1,679
                                                     --------       --------
                                                        4,903         71,475
                                                     --------       --------
                                                     --------       --------

CURRENT STATUS                                                                  

As of March 31, 1996, the Company was in default of covenants under the 
Credit Facility as amended, and the $12,000 Term Loan Credit and Guaranty       
Agreement (the "Term Loan"). In late June 1996, the Company reached an agreement
in principal with the Lenders under the Credit Facility whereby the then        
existing events of default would be waived.  In connection with these waivers,  
the Company has agreed to obtain a new credit facility or other financing or    
capital sufficient in amount to repay the amounts owed under the Credit Facility
by September 30, 1996.  If the Company is unable to obtain such new financing or
capital, then the Company will agree to undertake a strategic asset disposition 
program in order to permit the Company to repay the amounts due under the Credit
Facility at the earliest possible date.  Such agreement in principal further    
provides for $9,000 of the proceeds from the Asia/Pacific operations sale to be 
paid to the Credit Facility Lenders and for the Credit Facility's unpaid        
principal not to exceed $80,000 by October 31, 1996, $70,000 by November 30,    
1996, $60,000 by December 31, 1996, $40,000 by January 31, 1997, $20,000 by     
February 28, 1997, and $0 by March 31, 1997.  The agreement in principal further
provides for waivers for continuing noncompliance with the requirements to      
maintain certain defined interest coverage ratios and for the deferral of       
substantiallY all scheduled interest payments due under the terms of the Credit 
Facility until October 31, 1996.                                                

   The Credit Facility, as a result of continuing defaults, is classified as a
current obligation in the accompanying March 31, 1996 Consolidated Balance      
Sheets.  However, the                                                           

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      MEMOREX TELEX N.V.
     (A Netherlands Corporation)
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
      (In thousands, except share and per share amounts)

finalization of the agreement in principal will result in the Credit Facility   
continuing to be classified as current based on the revised payment terms.      

 The Company has received waivers of existing events of defaults under the
Term Loan. The waivers are contingent upon the finalization of the agreement in 
principal with the Credit Facility lenders.  The Term Loan, by its terms, is to 
be repaid prior to repayment of any principal amounts on the Credit Facility and
accordingly, is classified as current.                                          

 While the Company believes the description of the agreements in principal
with the Credit Facility and Term Loan lenders is an accurate description of    
such agreements, there can be no assurance that amendments will be concluded, or
if concluded, that the final amendments to the Credit Facility and the Term Loan
will be the same in all respects as the description.                            

DEBT AGREEMENTS                                                                 

The following is a description of the $100,000 Restructured Credit      
Facility, which was the new debt received in connection with the Reorganization 
Plan, and the $12,000 Term Loan Guaranty and Credit Agreement, which was        
obtained during fiscal year 1996.                                               

$100,000 RESTRUCTURED CREDIT FACILITY                                           

  The Credit Facility is composed of two tranches, a Working Capital Tranche
of $66,000 and the Continuing Tranche A Loans of $34,000, as defined by the     
Restructured Credit Facility Agreement, resulting in an aggregate original      
principal amount of $100,000.  The Credit Facility contained certain provisions 
that allowed the Company to obtain certain discounts upon prepayments made at   
various times over the life of the Credit Facility.  The discount was being     
accreted monthly as the associated discount opportunities expired. However, due 
to an amendment entered into during the fourth quarter of fiscal year 1996, the 
potential discount available to the Company under the terms of the Credit       
Facility was eliminated and as such, the amounts due under the Credit Facility  
were adjusted to reflect the principal amount currently due, which resulted in a
charge to expense of $12.8 million.                                             

The Credit Facility bore interest at LIBOR plus 2.25% through March 5,  
1996, at which time the Company and the Lenders revised the Credit Facility to  
waive all defaults which might arise from the Company entering into the $12,000 
Term Loan Credit and Guaranty Agreement and deferred all payments of principal  
and interest accruing through March 31, 1996 until March 5, 1998.  In return,   
the Lenders received a 1% increase in the interest rate on certain amounts where
amortization has been deferred.  Interest accruing subsequent to March 31, 1996 
continues to be payable at the end of each three month period.                  

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      MEMOREX TELEX N.V.
     (A Netherlands Corporation)
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
      (In thousands, except share and per share amounts)

   During fiscal year 1995, the Company and the holders of the Credit Facility
revised the terms of the agreement to provide that the proceeds from the sale of
certain designated assets prior to September 30, 1995 were required to be       
deposited into a collateral account controlled by an agent of the holders of the
Credit Facility (the agent).  These designated asset sales included a portion of
the dispositions discussed in Note 3, for the sales of properties used for      
assembly and distribution located in Tulsa and North Carolina and sales of stock
of the Company's equity investee.  The revised terms allowed the Company to     
receive the proceeds in excess of $4,000 from these asset sales upon request    
from the agent, provided that the funds released pay vendors or were used to    
retire the Credit Facility.  All such proceeds were used to pay vendors.        

 During fiscal year 1996, the Company requested and received a waiver from
the Lenders under the Credit Facility that released the remaining $4,000 of     
funds generated from the sale of assets which were on deposit with the agent.   

The obligation under the Credit Facility is guaranteed by Memorex Telex 
N.V. and certain other subsidiaries.  The guarantees are subordinate to the Term
Loan discussed below but rank senior to all other obligations and are secured on
a first priority basis to substantially all assets of the Company.              

The obligation under the Credit Facility is subject to the following    
restrictive financial and operating covenants:  (a) limitations on aggregate    
indebtedness, with certain limited exceptions, (b) restrictions from making     
certain payments including dividend payments, (c) limitations on capital        
expenditures, (d) requirements to maintain certain defined interest coverage    
ratios, (e) limitations on assets sales, with certain designated asset sales    
subject to specified treatment as described above, (f) requirements to reduce   
the facility outstanding to the extent that the Company has "Adjusted Free Cash 
Flow" as defined by the agreement, (g) limitations on investments,              
consolidations,  and mergers with certain limited exceptions, and other         
limitations.  See discussion above regarding violations of certain restrictive  
covenants.                                                                      

$12,000 TERM LOAN CREDIT AND GUARANTY AGREEMENT                                 

The Company obtained the $12,000 Term Loan Credit and Guaranty Agreement
during fiscal year 1996 to finance the Company's purchase of inventory to       
fulfill outstanding sales orders.  The Term Loan matures on March 5, 1998, and  
bears interest at prime rate through the first anniversary of the funding date, 
and prime rate plus two percent thereafter, subject to a seven percent minimum  
interest rate.  Interest is payable monthly, with any unpaid interest becoming a
part of the principal and accruing interest thereon.  Any asset                 

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      MEMOREX TELEX N.V.
     (A Netherlands Corporation)
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
      (In thousands, except share and per share amounts)

sale proceeds are required to be used to pay down the principal balance of the  
Term Loan, with the exception of the sale of the Asia/Pacific operations        
discussed in Note 7.                                                            

The Term Loan provides for payment of a $750 closing fee at the time of 
principal repayment.  The Company will expense this fee over the term of the    
loan.                                                                           

  The obligation under the Term Loan is guaranteed by Memorex Telex N.V. and
certain other subsidiaries.  The guarantees rank senior to all other obligations
and are secured on a first priority basis to substantially all assets of the    
Company.                                                                        

  The obligation under the Term Loan is subject to the following restrictive
financial and operating covenants:  (a) limitations on aggregate indebtedness,  
(b) limitations on the principal amount outstanding of the Term Loan, (c)       
restrictions from making certain payments including dividend payments, (d)      
limitations on capital expenditures and certain investments, (e) limitations on 
assets sales, subject to conditions specified above, (f) limitations on         
investments, consolidations, and mergers with certain limited exceptions, and   
other limitations.  As noted above the Company is also in default of certain    
provisions of the Term Loan.                                                    

Other borrowings include local borrowings by subsidiaries which are     
generally unsecured and mortgage obligations on certain facilities.  Other      
borrowings have weighted average interest rates of 11.3% at March 31, 1996 and  
1995.                                                                           

7. ASSETS HELD FOR SALE                                                         

In 1996, the Company began to actively pursue the sale of its           
Asia/Pacific operations.   On June 28, 1996, the Company reached an agreement   
to sell these subsidiaries to Kanematsu Corporation for approximately $25.0     
million.  The completion of the transaction is subject to certain conditions,   
primarily, the Company reaching an agreement with its Lenders as to the         
distribution of proceeds, in order to secure the release of the collateral.     
A tentative agreement has been reached with the Lenders (see Note 6).           
Asia/Pacific operations consist of the Australia, Taiwan, Singapore, and Hong   
Kong subsidiaries.  The carrying value of Asia/Pacific operations is            
approximately $25.0 million (including the $16.0 million of allocated           
reorganization value, see Note 2) and no significant gain or loss is expected   
to be recognized on the sale of the operations.  The sale of these operations   
is expected to be closed in July 1996.  The buyer is to deposit the proceeds    
with an escrow agent pending completion of closing conditions, primarily, the   
Company providing certain documentation necessary for closing.  If this sales   
transaction is not completed, then the carrying value of the allocated          
reorganized value assigned to the Asia/Pacific operations will be reassessed.   
See Note 14 for information with regards to the Asia/Pacific operations.      

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      MEMOREX TELEX N.V.
     (A Netherlands Corporation)
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
      (In thousands, except share and per share amounts)

8. RETIREMENT BENEFITS                                                          

   The majority of the Company's United States employees are covered by a non-
contributory defined benefit pension plan.  Benefits are based on years of      
service and average final compensation.  The Company's funding policy is to     
contribute at least the minimum amount required by ERISA.  Plan assets consist  
primarily of equity and debt securities and cash equivalents.                   

  Effective October 31, 1994, the Company suspended indefinitely the accrual
of benefits under its U.S. defined benefit pension plan.  In exchange the       
Company elected to lift the limitation on matching contributions on its U.S.    
defined contribution plan (described below).  This suspension was accounted for 
as a curtailment under Statement of Financial Accounting Standards No. 88,      
"Employers' Accounting for Settlements and Curtailments of Defined Benefit      
Pension Plans and for Termination Benefits."  This curtailment resulted in the  
Company recording a gain of approximately $9.7 million during the year ended    
March 31, 1995.  The Company continues to administer the plan, including the    
monitoring and investment of assets and distribution of benefit payments.       

Pension expense for the United States pension plan for the years ended  
March 31 was as follows:                                                        

                                                        [Enlarge/Download Table]


                                                                1996        1995  |       1994 
                                                                ----        ----  |       ---- 
                                                                                  |            
Service cost-benefits earned during the period             $       0   $   2,186  |  $   4,487 
Interest cost on projected benefit obligations                 4,521       5,148  |      6,227 
Actual return on plan assets                                 (10,489)     (3,975) |     (1,116)
Net amortization and deferrals                                 5,775      (1,123) |     (5,472)
                                                            --------    --------  |   -------- 
Net pension expense                                             (193)      2,236  |      4,126 
Net curtailment gain                                               0      (9,744) |          0 
Fresh start loss                                                   0           0  |     11,805 
                                                            --------    --------  |   -------- 
Net pension expense (income) of U.S. defined benefit plan  $    (193)  $  (7,508) |  $  15,931 
                                                            --------    --------  |   -------- 
                                                            --------    --------  |   -------- 


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      MEMOREX TELEX N.V.
     (A Netherlands Corporation)
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
      (In thousands, except share and per share amounts)

The funded status of the United States plan at March 31 was as follows: 

                                                     1996           1995
Actuarial present value of benefit obligations:                                 
  Vested                                            $  57,669      $  57,324
  Nonvested                                             1,123          1,751
                                                     --------       --------
Accumulated benefit obligations                          58,792         59,075  
Effect of projected future compensation levels                0              0  
                                                     --------       --------
Projected benefit obligations                            58,792         59,075  
Plan assets at market value                             (55,938)       (53,216) 
                                                     --------       --------
Plan assets less than projected benefit obligations       2,854          5,859  
Unrecognized net gain                                     3,132            320  
                                                     --------       --------
Pension liability included in balance sheet           $   5,986      $   6,179  
                                                     --------       --------
                                                     --------       --------

In 1996 and 1995 the discount rate used to measure the present value of 
benefit obligations was 7.75% and 8.0%, respectively. The projected long-term   
rate of return on plan assets was 9.5% in 1996 and 1995 and 10% in 1994.        

  The "fresh start" loss for the year ended March 31, 1994 resulted from the
immediate recognition of deferrals from prior years.                            

  In addition to the non-contributory defined benefit pension plan described
above, the Company also sponsors a U.S. defined contribution plan.  The plan    
covers substantially all of the Company's full-time U.S. employees.  In 1994,   
the Company's contributions consisted of matching 40% of each participant's     
contributions up to the first six percent of the participant's pay with a cap of
six hundred dollars per year.  During 1995, in conjunction with the suspension  
of accrual of benefits under its U.S. defined benefit pension plan, the Company 
decided to lift its six hundred dollar limitation on matching contributions.    
The Company's contribution expense was approximately $1.7 million in 1996, and  
$1.2 million in 1995 and $1.3 million in 1994.                                  

The Company and its subsidiaries have several non-United States pension 
plans, as generally dictated by local business practice and statutory           
requirements, covering substantially all of their employees in those countries  
where pension plans exist.  Plan assets consist primarily of insurance          
contracts, debt and equity securities, and cash equivalents.                    

   The pension expense for the non-United States defined benefit pension plans
for the years ended March 31 was as follows:                                    

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MEMOREX TELEX N.V.
 (A Netherlands Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share amounts)

                                                        [Enlarge/Download Table]

                                                       1996        1995     |    1994    
                                                       ----        ----     |    ----    
                                                                            |            
Service cost-benefits earned during the period       $   1,703   $   2,229  |  $   2,293 
Interest cost on projected benefit obligations           2,315       2,237  |      2,006 
Actual return on plan assets                            (2,876)        613  |     (2,141)
Net amortization and deferrals                           1,194      (2,342) |        534 
Employee contributions                                    (283)       (301) |       (347)
                                                     ---------   ---------  |  --------- 
Net pension expense of non-US pension plans              2,053       2,436  |      2,345 
Net curtailment gain                                         0           0  |       (666)
FAS 88 loss                                                382           0  |      2,695 
                                                     ---------   ---------  |  --------- 
Net pension expense of non-US defined benefit plans  $   2,435   $   2,436  |  $   4,374 
                                                     ---------   ---------  |  --------- 
                                                     ---------   ---------  |  --------- 

  The funded status of the non-United States pension plans at March 31 was
as follows:                                                                     

                                                        [Enlarge/Download Table]

                                                                1996                         1995            
                                                     ---------------------------  ---------------------------
                                                     Plan Assets     Accumulated  Plan Assets     Accumulated
                                                        Exceed        Benefits       Exceed        Benefits  
                                                     Accumulated       Exceed     Accumulated       Exceed   
                                                       Benefits      Plan Assets    Benefits      Plan Assets
                                                     ---------------------------  ---------------------------
                                                                                                             
Actuarial present value of benefit obligations:                                                              
     Vested                                            $  12,496      $  12,916     $   9,719      $  14,282 
     Nonvested                                               170            839           247          1,061 
                                                       ---------      ---------     ---------      --------- 
Accumulated benefit obligations                           12,666         13,755         9,966         15,343 
Effect of projected future compensation levels             2,378          2,169         2,380          4,240 
                                                       ---------      ---------     ---------      --------- 
Projected benefit obligations                             15,044         15,924        12,346         19,583 
Plan assets at market value                              (17,937)        (5,640)      (15,566)        (7,859)
                                                       ---------      ---------     ---------      --------- 
Plan assets net of projected benefit obligations          (2,893)        10,284        (3,220)        11,724 
Unrecognized net gain/(loss)                               2,010          1,779          (419)         2,485 
                                                       ---------      ---------     ---------      --------- 
Pension (asset) liability included in balance sheet    $    (883)     $  12,063     $  (3,639)     $  14,209 
                                                       ---------      ---------     ---------      --------- 
                                                       ---------      ---------     ---------      --------- 

The range of assumptions used for the non-United States pension plans 
reflects the different economic environments within the various countries.  The 
discount rates used to measure the present value of benefit obligations in 1996 
ranged from 4.75% to 9.0% and 4.75% to 10% in 1995.  The assumed rates of       
increase in future compensation levels for the majority of the employees covered
by the plans ranged from 2.5% to 7% in 1996 and 3.5% to 6.0% in 1995.           

9.  COMMITMENTS AND CONTINGENCIES                                               

The Company rents facilities and equipment in the normal course of its
business.  Rent expense under these operating leases was approximately $27.1    
million, $30.1  million and $40.2 million, in years ended March 31, 1996, 1995  
and 1994, respectively.  Future minimum rental                                  

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MEMOREX TELEX N.V.
 (A Netherlands Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share amounts)

commitments under non-cancelable operating leases at March 31, 1996 are as      
follows: 1997 - $15,734; 1998 - $10,733; 1999 - $7,495; 2000 - $3,706; 2001 -   
$3,454, and thereafter - $0.                                                    

    The Company is involved in various legal actions and claims which arise in
the normal course of business.  In the opinion of management, the final         
disposition of these matters will not have a material adverse effect on the     
Company's financial position or results of operations.                          

10.  STOCKHOLDERS' DEFICIT                                                      

Under the terms of the Credit Facility and Term Loan, the Company is  
restricted from making cash dividend payments.                                  

$2.00 WARRANTS AND $14.00 WARRANTS                                              

Upon consummation of the Reorganization Plan discussed in Note 2, the 
Company issued to holders of the Predecessor Company's debt and old common      
stock, new warrants to purchase 1,532,156 shares, and 1,000,000 shares of the   
Company's common stock at an exercise price of $2.00 and $14.00 per share,      
respectively.  The $2.00 and $14.00 warrants are exercisable for five and seven 
years, respectively from the date of issuance and have certain anti-dilution    
protection from future issuances.                                               

STOCK OPTION AND STOCK PURCHASE PLANS                                           

     The Company has stock options outstanding to participants under the Memorex
Telex Stock Option Plan (the "Stock Option Plan"), approved by stockholders on  
April 13, 1994.  Under this plan, both non-qualified options and incentive stock
options may be granted at an exercise price per share not less than fair market 
value at the date of the grant.  Options granted become exercisable in such     
amounts, at such intervals and subject to such terms and conditions as          
determined by the compensation and stock option committee of the supervisory    
board.                                                                          

  The Company also maintains a stock purchase plan under the Memorex Telex
Employees' Stock Purchase Plan ("Stock Purchase Plan"), approved by stockholders
on April 13, 1994.  The plan allows participants to purchase new common stock at
85% of the lower of the fair market value at the last trading day before the    
calendar month of participation and the last trading day of the calendar month  
of participation.  Employee contributions can be made through lump sum          
contributions or periodic payroll deductions up to annual plan specified limits.
The shares purchased under this plan were 23,369 and 53,296 in fiscal 1996 and  
1995, respectively.  In November 1995, the Management Board of Memorex Telex    
indefinitely suspended the Stock Purchase Plan.                                 

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MEMOREX TELEX N.V.
 (A Netherlands Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share amounts)

   The Stock Option and Stock Purchase Plans provided  for the issuance of a
maximum of 3,110,978 and 466,647 shares, respectively, of the Company's new     
common stock in the form of ADRs.                                               

During fiscal 1996, 1,047,500 options were terminated under the Stock 
Option Plan. The amount of stock options outstanding was 1,187,500 and 2,002,500
at March 31, 1996 and 1995, respectively and have an option price of $4.00.     
Total shares exercisable were 471,250 and 0 at March 31, 1996 and 1995,         
respectively. The Stock Option and Stock Purchase Plans have 2,155,978 and      
389,982 shares available for future grants and issuance, respectively.  At March
31, 1996, 3,500,960 shares were reserved for issuance under the Stock Option and
Stock Purchase Plan.                                                            

11.  REORGANIZATION AND REALIGNMENT COSTS                                       

    Since fiscal 1993, the Company has made a series of announcements defining
plans to restructure its worldwide operations.  The Company continues its       
transition from a manufacturer of computer hardware to a provider of networking 
and storage solutions.  As part of this transformation, the Company continues to
implement its plans for re-engineering its business processes which will result 
in workforce reductions, consolidation of functions, disposition of facilities, 
and closure or sale of certain unprofitable operations. In connection with the  
Company's Reorganization Plan, as discussed in Note 2, the Company recorded a   
$406.5 million reorganization charge in fiscal 1994.  This reorganization charge
included "fresh start" adjustments to fair value individual assets and          
liabilities (approximately, $342.7 million), workforce reductions, and          
consolidation and closure costs (approximately, $51.6 million), and professional
fees associated with the restructuring (approximately, $12.3 million).  The fair
value adjustments were based on independent appraisals, discounted cash flow    
analyses, evaluations, estimations and other studies which resulted in          
adjustments including the reorganization value in excess of amounts allocable to
identifiable assets (approximately, $281.5 million), projected benefit          
obligations on pensions (approximately, $15.0 million), property, plant and     
equipment  (approximately, $8.8 million), inventories (approximately, $5.8      
million) and unfavorable contractual obligations and commitments (approximately,
$25.8 million).                                                                 

  During fiscal 1994, it was determined that the Company had overestimated
its 1993 realignment charge by approximately $6.8 million.  This amount was     
included as a reduction of the 1994 reorganization charge.  The remaining       
liability for the 1993 realignment initiatives has been combined with the 1994  
reorganization charge for tracking of restructuring activities.                 

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MEMOREX TELEX N.V.
 (A Netherlands Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share amounts)

The following presents the Company's reorganization activities and the
remainder of charges to be utilized:                                            

                                                        [Enlarge/Download Table]

                                                                         Reorganization Items                                       
                                           -----------------------------------------------------------------------------------------
                                                                     Professional              Unfavorable                          
                                            Workforce  Consolidation   Fees for   Asset and    Contractual                          
                                            Reductions   & Closure     Reorgan-   Liability   Obligations &     Other       Total   
                                                           Costs       ization    Valuations   Commitments                          
                                           ----------- ------------- ----------- ------------ -------------- ----------- -----------
                                                                                                                                    
Reorganization charges in 1994               $40,362      $11,196      $12,266     $311,114      $25,803        $5,795     $406,536 

Noncash items & transfers in 1994                            (506)     (12,266)    (311,114)        -             (877)    (324,763)

Remaining realignment charges from 1993       24,546          794         -            -           8,681         2,895       36,916 

Reorganization & realignment reserve       ----------- ------------- ----------- ------------ -------------- ----------- -----------
     at March 31, 1994                        64,908       11,484         -            -          34,484         7,813      118,689 

Reclassifications and transfers of reserves   (7,827)      (1,447)        -            -           1,968         1,990       (5,316)

Noncash items                                   -            -            -            -          (6,607)         -          (6,607)

Cash payments                                (23,793)      (3,873)        -            -          (8,970)       (1,412)     (38,048)

Reorganization & realignment reserve       ----------- ------------- ----------- ------------ -------------- ----------- -----------
     at March 31, 1995                        33,288        6,164         -            -          20,875         8,391       68,718 

Reclassifications and transfers of reserves   (1,232)       1,057         -            -          (1,057)        1,232            0 

Release of excess reserves                    (2,132)        (197)        -            -          (3,347)       (4,113)      (9,789)

Noncash items                                   -            -            -            -           3,534           408        3,942 

Cash payments                                (10,084)      (5,496)        -            -         (10,322)       (1,407)     (27,309)

Reorganization & realignment reserve       ----------- ------------- ----------- ------------ -------------- ----------- -----------
     at March 31, 1996                        19,840        1,528         -            -           9,683         4,511       35,562 

Note:  The reorganization and realignment reserve includes both the current and 
noncurrent portion of the reorganization and realignment reserve.               

In fiscal 1996, as initiatives progressed, it was determined that the 
Company had overestimated its 1994 restructuring charge by approximately $9.8   
million.  This change is reflected in the release of excess reserves and was    
netted against the amortization of intangibles in the 1996 Statement of         
Operations.  As of March 31, 1996, the Company has determined that the          
remaining reorganization and realignment reserve balances are adequate to cover 
the presently planned remaining restructuring items. However, as discussed in   
Note 1, the Company's plans may include, if necessary, the disposition of       
certain other operations.  No provision for losses, have been reflected in the  
financial statements as of March 31, 1996, if such dispositions occur.  In      
fiscal 1995, the Company determined that it was necessary to redistribute by    
category a portion of the remaining reserves.  This redistribution primarily    
reduced reserve balances designated for workforce actions and increased reserves
designated for contractual obligations and commitments and appears on the       
reclassifications and transfers of reserves line for 1995 activity in the       
preceding table.   The Company anticipates $16.4 million of reserves to be      
utilized in fiscal 1997.  However, the Company believes that it will need       
additional capital to meet all of the future costs of the re-engineering        
initiatives remaining. Management's plans to meet its additional capital        
requirements are discussed further in Note 1.                                   

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MEMOREX TELEX N.V.
 (A Netherlands Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share amounts)

12.  FINANCIAL INSTRUMENTS AND RISK MANAGEMENT                                  

Certain of the Company's foreign subsidiaries manage their exposure to
fluctuations in foreign currency exchange rates relating to certain U.S. dollar 
inventory purchase obligations by entering into forward foreign currency        
exchange contracts.  The forward contracts are not held for trading purposes.   
The agreements generally have maturities of six months or less and contain an   
element of risk that the counterparty may be unable to meet the terms of the    
agreements.  In order to minimize its exposure to credit risk, the Company      
limits its counterparties to major financial institutions.  The Company does not
expect any of the counterparties to fail to meet its obligations.  At March 31, 
1996 and 1995, the Company had forward foreign currency contracts outstanding to
purchase U.S. dollars of approximately $19.0 million and $12.0 million,         
respectively.  The current market settlement values of these contracts were not 
materially different from those recorded.  Gains or losses on these contracts   
are included in the underlying cost of the inventory acquired.                  

   The Company offers lease financing of selected products to its customers,
which include various industries and governmental agencies in multiple          
geographic regions, with lease terms of 3-5 years.  Certain of these leases are 
sold on a limited recourse basis. Sales of lease receivables in 1996, 1995, and 
1994 were approximately $35.3 million, $35.0 million, $42.0 million,            
respectively.                                                                   

    At March 31, 1996, it is not practicable to estimate the fair value of the
Company's borrowings under its Credit Facility or Term Loan because no active   
marketplace exists and due to the significant expense to obtain an outside      
appraisal.  See Note 6 for discussion of the carrying amount, maturity date, and
interest rate of the Company's debt instruments.                                

    The Company's investment in a publicly traded company, accounted for under
the equity method of accounting, had a fair market value, based on quoted market
prices of $24.1 million and $30.7 million, and a carrying value of $7.7 million 
and $17.7 million, at March 31, 1996 and 1995, respectively.  The investment is 
included in other assets the Consolidated Balance Sheets.  See Note 3 for       
discussion of certain sales of the Company's investment during fiscal year 1996.

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MEMOREX TELEX N.V.
 (A Netherlands Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share amounts)

13.  OTHER FINANCIAL INFORMATION                                                

The following is a summary of certain other financial information:    

                                                                   Predecessor
                                       Reorganized Company         Company
                                      ------------------------------------------
                                      Year Ended March 31,
                                      ------------------------------------------
                                      1996           1995    |      1994
                                      ----           ----    |      ----
(i)   Revenues:                                                  |              
       Product                       $   463,517    $   529,846 |  $   620,775
       Service                           346,112        351,568 |      348,135
       Rentals and Brokerage              24,424         28,337 |       46,664
                                     -----------    ----------- |  -----------
                                     $   834,053    $   909,751 |  $ 1,015,574
                                     -----------    ----------- |  -----------
                                     -----------    ----------- |  -----------
(ii)  Cost of Revenues:                                          |              
       Product                       $   353,398    $   378,603 |  $   427,366
       Service                           263,529        254,970 |      240,492
       Rentals and Brokerage              14,666         17,454 |       37,802
                                     -----------    ----------- |  -----------
                                     $   631,593    $   651,027 |  $   705,660
                                     -----------    ----------- |  -----------
                                     -----------    ----------- |  -----------
(iii) Cash Flow Information:                                     |              
       Interest Paid                 $    15,728   $     17,646 |  $    27,581
       Income Taxes Paid                   2,369          5,849 |        6,743

  Sources (uses) of working capital excluding changes resulting from
realignment and reorganization items reflected in the consolidated statements of
cash flows are as follows:                                                      

                                                                     Predecessor
                                        Reorganized Company          Company
                                       -----------------------------------------
                                        Year Ended March 31,
                                       -----------------------------------------
                                      1996          1995     |      1994
                                      ----          ----     |      ----
                                                   |
Receivables                            $    5,192    $   28,504  |   $   29,619 
Inventories and Service Parts                 (93)       27,378  |        1,770 
Other current assets                         (348)        3,276  |       (1,426)
Accounts payable                              700        24,474  |      (34,129)
Accrued liabilities                        (4,186)      (91,393) |       (6,948)
                                      ----------    ----------  |   ----------
                                       $    1,265    $   (7,761) |   $  (11,114)
                                      ----------    ----------  |   ----------
                                      ----------    ----------  |   ----------

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      MEMOREX TELEX N.V.
     (A Netherlands Corporation)
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
      (In thousands, except share and per share amounts)

14. GEOGRAPHIC DATA                                                             

The Company operates in one business segment.  Certain information by   
geographic area for the years ended March 31, 1996, 1995 and 1994 was as        
follows:                                                                        

                                                        [Enlarge/Download Table]


                                                     Revenue                      Operating                 
                                    ----------------------------------------       Income    Identifiable   
REORGANIZED COMPANY:                  External       Internal        Total          (Loss)      Assets      
--------------------                  --------       --------        -----           ----       ------      
                                                                                                            
1996:  Domestic (Netherlands)      $    15,471     $   88,304     $  103,775   $    9,548    $  210,041     
       United States                   368,473         30,922        399,395      (13,430)      134,458     
       Europe (excluding                                                                                    
         Netherlands)                  340,286          4,173        344,459        7,105       111,885     
       Asia/Pacific Operations(3)       73,258            374         73,632       10,834        35,501     
       Other (1)                        36,565             44         36,609     (222,596)       23,686     
       Eliminations                          0       (123,817)      (123,817)       1,064      (247,403)    
                                    ----------      ---------      ---------    ---------     ---------     
                                   $   834,053     $        0     $  834,053   $ (207,475)   $  268,168     
                                    ----------      ---------      ---------    ---------     ---------     
                                    ----------      ---------      ---------    ---------     ---------     

1995:  Domestic (Netherlands)      $    13,096     $  126,242    $   139,338   $    1,885    $  189,725     
       United States                   438,579         42,605        481,184       30,621       159,535     
       Europe (excluding                                                                                    
         Netherlands)                  339,572         10,417        349,989        4,839       115,329     
       Asia/Pacific Operations          73,090            682         73,772        1,118        40,776     
       Other (1)                        45,414            514         45,928     (124,508)      273,541     
       Eliminations                          0       (180,460)      (180,460)       1,185      (242,440)    
                                    ----------      ---------      ---------    ---------     ---------     
                                   $   909,751     $        0    $   909,751   $  (84,860)   $  536,466     
                                    ----------      ---------      ---------    ---------     ---------     
                                    ----------      ---------      ---------    ---------     ---------     

1994:  Domestic (Netherlands)      $    16,305     $  156,343    $   172,648   $    1,129    $  223,668     
       United States                   499,232         75,620        574,852       40,349       190,739     
       Europe (excluding                                                                                    
         Netherlands)                  362,884         13,727        376,611        2,833       116,545     
       Asia/Pacific Operations          69,769            500         70,269        2,853        42,750     
       Other (1)                        67,384          1,938         69,322      (19,463)      405,713     
       Eliminations                          0       (248,128)      (248,128)       4,546      (258,162)    
                                    ----------      ---------      ---------    ---------     ---------     
                                   $ 1,015,574     $        0    $ 1,015,574   $   32,247    $  721,253  (2)
                                    ----------      ---------      ---------    ---------     ---------     
                                    ----------      ---------      ---------    ---------     ---------     


Notes:                                                                          
(1) Other includes reorganization value in excess of the amounts allocable to   
   identifiable assets and the associated amortization.  Additionally includes
the reorganization value write-off discussed in Note 2.                 
(2) Reflects the fair value of identifiable assets of the Reorganized Company   
at March 31, 1994.                                                      
(3) Operating income (loss) includes gain of $5.5 million related to sale of    
shares of equity investee (see Note 3).                                 

Sales and transfers between geographic areas are made with reference to 
prevailing market prices and at prices approximating those charged to           
unaffiliated distributors.  Operating income is revenue less related costs and  
operating expenses excluding net interest expense.  No single customer accounted
for 10% or more of the Company's total revenue in the period.                   

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      MEMOREX TELEX N.V.
     (A Netherlands Corporation)
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
      (In thousands, except share and per share amounts)

15. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)                                 

Selected quarterly financial data, which is unaudited, for each of the  
quarters in the fiscal years ended March 31, 1996 and 1995 is as follows:       

                                                                [Download Table]


                            June 30,  September 30,  December 31,    March 31,     
                              1995        1995           1995           1996       
                              ----        ----           ----           ----       
                                                                                   
Net revenues               $220,551     $207,870       $206,340       $199,292     
Gross margin                 59,323       51,738         48,153         43,246     
Operating loss              (23,077)     (24,006)       (28,495)      (131,897) (1)
Net loss                   ($27,729)    ($31,522)      ($36,131)     ($151,357) (2)
Net loss per common share    ($1.11)      ($1.26)        ($1.44)        ($6.03)    

                            June 30,  September 30,  December 31,    March 31,     
                              1994        1994           1994           1995       
                              ----        ----           ----           ----       

Net revenues               $232,637     $222,988       $232,518       $221,608     
Gross margin                 67,736      64,656         67,551         58,781      
Operating loss              (21,759)    (26,288)       (11,261) (3)   (25,552)     
Net loss                   ($30,633)   ($31,662)      ($18,357)      ($27,359)     
Net loss per common share    ($1.23)     ($1.27)        ($0.73)        ($1.09)     


Notes:   (1)  Includes amortization and write-off of reorganization value in    
       the amount of $99,334 for the quarter ended March 31, 1996.

       (2)  Includes additional accretion of debt of $12,779 for the quarter
ending March 31, 1996.                              

     (3)  Includes curtailment gain of $9,744 from the suspension of the
          accrual of benefits for the U.S. defined benefit pension plan.

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                                                                     SCHEDULE II
      MEMOREX TELEX N.V.
     VALUATION AND QUALIFYING ACCOUNTS
      (In Thousands)

                                                        [Enlarge/Download Table]


                                                 Additions   Additions                         
                                   Balances at  charged to    charged                Balances  
                                    beginning    costs and    to other                at end   
                                    of period     expenses    accounts  Deductions   of period 
Description                        -----------  ----------   ---------  ----------   --------- 
-----------                                                                                    
                                                                                               
REORGANIZED COMPANY:                                                                           
--------------------                                                                           
For the year ended March 31, 1996                                                              
Allowance for doubtful accounts    $  (12,357)  $   (4,606)   $   163    $   6,639  $  (10,161)

For the year ended March 31, 1995                                                              
Allowance for doubtful accounts       (14,263)      (2,926)      (651)       5,483     (12,357)

PREDECESSOR COMPANY:                                                                           
--------------------                                                                           
For the year ended March 31, 1994                                                              
Allowance for doubtful accounts       (17,196)      (3,188)       178        5,943     (14,263)


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      SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange  
Act of 1934, the registrant has duly caused this report to be signed on its     
behalf by the undersigned, thereunto duly authorized.                           

                MEMOREX TELEX N.V.

               By: /s/ David J. Faulkner
                                 -----------------------------------
                   (David J. Faulkner)
                 Managing Director
July 15, 1996                           and Chief Financial Officer             

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and  
in the capacities and on the dates indicated.                                   

Signature & Title                                     Date    
-----------------                                     ----    

By: /s/Peter H. Dailey                                                          
-------------------------------                                         
(Peter H. Dailey)                                                   

Chief Executive Officer                               July 15, 1996   

By: /s/David J. Faulkner                                                        
-------------------------------                                         
(David J. Faulkner)                                                 

Managing Director                                                     
and Chief Financial Officer                           July 15, 1996   

By: /s/Gregory S. Wood                                                          
-------------------------------                                         
(Gregory S. Wood)                                                   

Senior Vice President and                                             
Chief Accounting Officer                              July 15, 1996   

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/ X / PLEASE MARK VOTES                                                         
AS IN THIS EXAMPLE                                                  

MEMOREX TELEX N.V.                        

                                                        [Enlarge/Download Table]


                                                                                                                                  

  Mark box at right if you do not want more than one annual          1 Elect Peter H. Dailey to the          FOR  AGAINST ABSTAIN 
  report mailed to your household.                /    /               Management Board of the Company.      /  /   /   /   /  /  

  Mark box at right if address change has been noted on the          2 Elect Gregory S. Wood to the          FOR  AGAINST ABSTAIN 
  reverse side of this card.                     /    /                Management Board of the Company.      /  /   /   /   /  /  

                                                                     3 Elect Brad Sowers to the Management   FOR  AGAINST ABSTAIN 
                                                                       Board of the Company.                 /  /   /   /   /  /  

                                                                     4 Elect Anthony J. Barbieri to the      FOR  AGAINST ABSTAIN 
                                                                       Management Board of the Company.      /  /   /   /   /  /  

                                                                     5 Adopt the annual financial statements FOR  AGAINST ABSTAIN 
                                                                       contained in the Statutory Annual     /  /   /  /    /  /  
                                                                       Report of the Company for the fiscal                       
 `                                                                     year ended March 31, 1996, which also                      
                                                                       contains the Report of the Management                      
                                                                       Board of the Company.                                      

                                                                     6 Appoint Ernst and Young LLP as United  FOR AGAINST ABSTAIN 
                                                                       States auditors for the Company and    / /   /  /    /  /  
                                                                       Moret, Ernst & Young as Netherlands                        
                                                                       auditors for the Company for the fiscal                    
                                                                       year ending March 31, 1997.                                

                                                ------------------                                                                
  Please be sure to sign and date this Proxy.    Date                  If you wish to give a discretionary proxy to the      /   /
------------------------------------------------------------------     Chairman of the Meeting, please mark the box to the        
                                                                       right.                                                     

                                                                       PLEASE NOTE: Marking the box at the right voids any        
                                                                       other instructions indicated above.                        

         Shareholder sign here                   Co-owner sign here                                                               
--------                       -----------------                                                                                  


---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- 
 TO THE REGISTERED HOLDERS OF AMERICAN DEPOSITARY RECEIPTS

 REPRESENTING COMMON SHARES OF

      The Depositary has received advice that the Annual General Meeting
     (the "Meeting") for Memorex Telex N.V. (the "Company"), will be held at the
offices of the Company at Hoogoorddreef 9, 1101 BA, Amsterdam, The    
    Netherlands, on Monday, September 30, 1996, at 11:00 a.m. (local time) for
  the purposes set forth in the enclosed Notice of Annual General Meeting.

        If you are desirous of having the Depositary, through its Nominee or
Nominees, vote or execute a proxy to vote the shares of common stock  
represented by your American Depositary Receipt(s) for or against the 
    Resolutions to be proposed, or any of them, at the Meeting, kindly execute
   and forward the enclosed Voting Instruction Card to Morgan Guaranty Trust
  Company of New York.  The enclosed postage paid envelope is provided for
this purpose.  This Voting Instruction Card should be executed in such
     manner as to show clearly whether you desire the Nominee or the Nominees of
   the Depositary to vote for or against the Resolutions, or any of them, as
the case may be.  You may include instructions to give a discretionary
    proxy to the Chairman of the Meeting.  The Voting Instruction Card MUST be
forwarded in sufficient time to reach the Depositary before 4:00 P.M.,
September 26, 1996 (for overnight courier or other express deliveries,
  please use the following address:  Morgan ADR Service Center, 2 Heritage
    Drive, North Quincy, MA   02171, Attn: John Sjosten).  Only the registered
holders of record at the close of business on August __, 1996, will be
entitled to execute the enclosed Voting Instruction Card.             

Morgan Guaranty Trust Company of New York, Depositary                 
60 Wall Street, New York, New York 10260-0060                         

Dated:  September 3, 1996                                             

DEF 14A
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      MEMOREX TELEX N.V.
     Morgan Guaranty Trust Company of New York, Depositary
      P. O. Box 9184, Boston, MA, 02102-9906

The undersigned, a registered holder of American Depositary Receipts    
representing Common Stock, dfl. 0.10 nominal value, of Memorex Telex N.V., of   
record August __, 1996, hereby requests and authorizes Morgan Guaranty Trust    
Company of New York, the Depositary, through its Nominee or Nominees, to vote or
execute a proxy to vote the underlying Common Stock of the Company represented  
by such American Depositary Receipts, on the Resolutions at the Annual Meeting  
of Stockholders of the Company to be held on September 30, 1996, or any         
adjournment thereof.                                                            
These instructions, when properly signed and dated, will be voted in the
manner directed herein.  If you mark the box to indicate that you wish to give a
discretionary proxy to the Chairman of the Meeting, the underlying shares       
represented by your American Depositary Receipt(s) will be voted by the Chairman
of the Meeting in his discretion.  If these instructions are properly signed and
dated, but no direction is made, the underlying shares represented by such      
Receipt(s) will be voted by the Depositary FOR all Resolutions at the Meeting.  
NOTE:  In order to have the aforesaid shares voted, this Instruction  
Card should be returned on or before 4 P.M. September 26, 1996 (for overnight   
courier or other express deliveries, please use the following address:          
Morgan ADR Service Center, 2 Heritage Drive, North Quincy, MA 02171, Attn:      
John Sjosten)                                                                   

      --------------------------------------------
      PLEASE VOTE, DATE AND SIGN ON OTHER SIDE
---------------------                                            ---------------
     AND RETURN PROMPTLY IN ENCLOSED ENVELOPE.
      --------------------------------------------
Please sign this proxy exactly as your name appears on the address label affixed
hereto.  Joint owners should each sign personally.  Trustees and other          
fiduciaries should indicate the capacity in which they sign, and where more than
one name appears, a majority must sign.  If a corporation, this signature should
be that of an authorized officer who should state his or her title.             
--------------------------------------------------------------------------------
HAS YOUR ADDRESS CHANGED?                                                       

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Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘DEF 14A’ Filing		Date		First		Last			Other Filings
		12/31/13		23
		12/31/11		23
		10/1/03		23
		12/31/98		14		27
		3/5/98		60		61
		9/30/97		13
		5/2/97		13
		3/31/97		2		75
		2/28/97		59
		1/31/97		59
		12/31/96		59
		11/30/96		59
		10/31/96		14		59
For Period End:		9/30/96		2		76			10-Q,  NT 10-Q,  PRE 14A
		9/26/96		3		76
Filed on:		9/17/96
		9/6/96		2		3
		9/3/96		75
		8/30/96		3
		8/13/96		16
		7/15/96		74					10-K
		6/28/96		45		62
		5/31/96		17		40
		4/19/96		6
		4/4/96		42
		4/1/96		7		44
		3/31/96		2		75			10-K,  NT 10-K
		3/22/96		42
		3/19/96		42
		3/5/96		44		60
		10/31/95		9
		9/30/95		61
		4/1/95		44
		3/31/95		8		73
		10/31/94		9		63
		9/30/94		5		34
		6/30/94		25
		5/19/94		25
		4/13/94		66
		4/1/94		44
		3/31/94		8		73
		3/28/94		10		25
		3/24/94		25		51
		3/14/94		43
		2/9/94		51
		2/3/94		43
		1/6/94		43
		1/1/94		9		39
		6/29/93		44
		3/31/93		26		49
		3/24/93		43
		11/4/92		43		44
		3/31/92		25		26
		2/5/92		43
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